Which of the Following Constitutes an Example of a Cost

question 72

Multiple Choice

Which of the following constitutes an example of a cost which is not incremental, and therefore not relevant in an accept/reject decision?

• A) A firm has a parcel of land that can be used for a new plant site or, alternatively, can be used to grow watermelons.
• B) A firm can produce a new cleaning product that will generate new sales, but some of the new sales will be from customers who switch from another product the company currently produces.
• C) A firm orders and receives a piece of new equipment which is shipped across the country and requires $25,000 in installation and set-up costs.
• D) All of the above are not examples of incremental cash flows.
• E) Answers a, b, and c are examples of incremental cash flows, and therefore, relevant cash flows.

---

Definitions:

Vision

A forward-looking statement or concept that outlines what an organization or individual aspires to achieve in the future.

Creativity And Innovation

The ability to generate new ideas, solutions, or novel approaches, which can lead to new or improved products, services, or processes.

Innovation And Vision

The ability to introduce new ideas, products, or methods, combined with a clear and inspiring direction for the future.

Vision And Prescient

Pertains to the ability to envision future trends, developments, or occurrences, often based on insightful analysis or foresight.