Redmond Ltd Is Closing One of Its Divisions

question 102

Multiple Choice

Redmond Ltd is closing one of its divisions. Operating data on this division follows: Overhead consists of $30,000 in salary and $10,000 for rent and insurance. The salary is for the chief engineer, who will continue to work for Redmond even if the division is closed.
Rent and insurance that will cease if the division is closed is an

• A) Unavoidable and irrelevant cost
• B) Unavoidable and relevant cost
• C) Avoidable and irrelevant cost
• D) Avoidable and relevant cost

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Definitions:

GAAP

Commonly adhered to accounting rules and standards for financial reporting, known as Generally Accepted Accounting Principles.

Day-to-Day Operations

The routine activities necessary for a business to function effectively, including production, sales, and administration tasks.

Eco-Efficiency Measure

An assessment method focusing on reducing environmental impacts while maximizing productivity and efficiency.

Recycling

is the process of collecting and processing materials that would otherwise be discarded as trash and turning them into new products.