Which of the Following Is Not Considered a Relevant Concern

question 31

Multiple Choice

Which of the following is not considered a relevant concern in deter- mining incremental cash flows for a new product?

• A) The use of factory floor space which is currently unused but available for production of any product.
• B) Revenues from the existing product that would be lost as a result of some customers switching to the new product.
• C) Shipping and installation costs associated with preparing the machine to be used to produce the new product.
• D) The cost of a product analysis completed in the previous tax year and specific to the new product.
• E) None of the above. (All are relevant concerns in estimating relevant cash flows attributable to a new-product project.)

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Definitions:

Operating Activities

Operating Activities involve the cash flows that are generated from the primary business activities of a company, such as selling products or services.

Spreadsheet Method

A method of financial analysis or budgeting that uses a spreadsheet software to organize, calculate, and present data.

Noncash Accounts

Noncash accounts are financial accounts that track transactions not involving physical cash, such as depreciation, accruals, and allowances for doubtful accounts.

Purchase of Equipment

The acquisition of physical assets or machinery intended for use in production or operational processes.