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.

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Definitions:

Five Stages

Refers to a conceptual framework outlining the successive phases an individual, group, or project undergoes to achieve development or change.

Adjourning

The final stage in group development where the group completes its task and members go their separate ways.

Team Viability

The capacity of a team to continue working effectively over time, maintaining the potential for future success.

Long-Run Test

A long-run test is an evaluation conducted over an extended period of time to assess the sustainability, reliability, or performance of a product, service, or system under prolonged use.