Which of the Following Is Relevant Information in a Decision

question 22

Multiple Choice

Which of the following is relevant information in a decision whether old equipment presently being used should be replaced by new equipment?

• A)the cost of the old equipment
• B)the salvage value of the old equipment
• C)the book value of the old equipment
• D)the accumulated depreciation of the old equipment

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Definitions:

Total Profit

The total earnings of a business after subtracting all costs, including both fixed and variable costs, from total revenue.

Average Total Cost

The total cost of production divided by the total quantity produced, including both fixed and variable costs.

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced.

Losing Money

The process where expenses exceed revenues, resulting in financial loss for a business or individual.