Identifying Relevant and Irrelevant Costs
Sarah Ramirez is considering taking a part-time job at a local clothing store. She loves the store and shops there often, but unfortunately, employee discounts are given only to full-time employees. If Sarah takes this job, she would have to withdraw from her Tuesday night basket-weaving class to work. Accepting the job would also mean that Sarah must give up her volunteer work at the local animal sanctuary, an activity that she enjoys a great deal. The new job would pay approximately $125 per week but would cost Sarah $15 per week in gas. Sarah would be able to keep her Saturday afternoon job at the library that pays $40 per week.
A list of factors that Sarah has identified follows. For each one, indicate whether it is relevant or irrelevant to Sarah’s decision.
1.The $125 income from the new job.
2.The $40 income from the library.
3.The $50 nonrefundable registration fee Sarah paid for the basket-weaving class.
4.The $15 cost for gas.
5.The $75 per month that Sarah spends for clothing.
6.The time Sarah spends volunteering at the animal sanctuary.
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