Which Factor Is NOT Relevant When Determining Incremental Cash Flows

question 16

Multiple Choice

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

• A)the land that would be used for the new project and 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:

Stem-and-Leaf Display

A stem-and-leaf display is a method of displaying quantitative data to show its shape and distribution by dividing each data point into a stem (the leading digit(s)) and a leaf (the last digit).

Stem

The leading digit(s) in stem-and-leaf plots, a form of data display that shows data values and their frequency of occurrence.

Leaf

In a graphical data representation, a leaf is the end part of a stem in a stem-and-leaf plot, which displays numerical data.

Bar Chart

A graphical representation of data using bars of different heights or lengths to show the values of various categories.