A Company Decided to Replace an Old Machine with a New

question 38

Multiple Choice

A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

• A) the book value of the old equipment
• B) the depreciation expense on the old equipment
• C) the loss on the disposal of the old equipment
• D) the setup cost of the new equipment

---

Definitions:

Sample Means

The arithmetic average of a set of values or observations, derived from a subset of a larger population.

Control Limits

The boundaries of acceptable variation in a process, used in statistical process control charts.

Chance Variation

The unpredictable fluctuations or differences that are observed in different samples from the same population, even under the same conditions.

Production Process

The series of steps and procedures involved in the creation of a product from raw materials.