Which of the Following Is NOT a Relevant Factor When

question 27

Multiple Choice

Which of the following is NOT a relevant factor when determining incremental cash flows for a new product?

• A) the land that would be used for the new project could be sold to another firm.
• B) revenues from an existing product that would be lost as a result of customers switching to the new product.
• C) shipping and installation costs associated with preparing a machine that would be used to produce the new product.
• D) the cost of a marketing study that was completed last year related to the new product. This research led to the tentative decision to go ahead with the new product, and the cost of the research was expensed for tax purposes last year.

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Definitions:

Industrial Output

The total volume of products and services produced by an industry, often used as an indicator of industrial activity and economic health.

Internal Combustion

A process where fuel is burned within an engine, producing power through the expansion of gases.

Carburetor

A device in an internal combustion engine that mixes air with a fine spray of liquid fuel.

Compulsory Education

The requirement by law for children to attend school up to a certain age to ensure they receive a basic education.