1.A copier company has been using the same Copier A for 5 years. This copier can copy approximately 50 sheets a minute. The company has an opportunity to purchase a new Copier B that can process approximately 60 sheets a minute. The old machine will continue to be used for jobs that arenâ??t rush jobs. The new machine will create a need for additional fixed selling expenses, an additional supervisor, and the two employees to use the machine. No other fixed costs will change.
Please list out whether each of these costs are relevant ( R) or not relevant ( NR). Format your answer as follows: a) R, b) R, and so forth.
a. Copier revenue
b. Book value-Copier A
c. Disposal value-Copier A
d. Variable selling expenses
e. Fixed selling expenses
f. Depreciation of Copier A
g. General and administrative overhead fixed
h. Direct labor
i. Indirect labor
j. Market value of Copier B
a. Copier revenue - RELEVANT (R)
b. Book value-Copier A - NOT RELEVANT (NR)
This solution helps with questions about relevant costs.