Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Question

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Answer 1

Question

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following:

Purchasing cost,
Installation cost,
Operating costs of the new equipment,
Disposal costs of the old equipment,
Repair costs of the old equipment, and so on.

Hence, the purchase price of the old equipment would not be relevant to the decision.

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Answer 2

Question

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following:

Purchasing cost,
Installation cost,
Operating costs of the new equipment,
Disposal costs of the old equipment,
Repair costs of the old equipment, and so on.

Hence, the purchase price of the old equipment would not be relevant to the decision.

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Answer 3

Question

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following:

Purchasing cost,
Installation cost,
Operating costs of the new equipment,
Disposal costs of the old equipment,
Repair costs of the old equipment, and so on.

Hence, the purchase price of the old equipment would not be relevant to the decision.

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Answer 4

Question

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following:

Purchasing cost,
Installation cost,
Operating costs of the new equipment,
Disposal costs of the old equipment,
Repair costs of the old equipment, and so on.

Hence, the purchase price of the old equipment would not be relevant to the decision.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following:

Purchasing cost,
Installation cost,
Operating costs of the new equipment,
Disposal costs of the old equipment,
Repair costs of the old equipment, and so on.

Hence, the purchase price of the old equipment would not be relevant to the decision.

Answer 6

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following:

Purchasing cost,
Installation cost,
Operating costs of the new equipment,
Disposal costs of the old equipment,
Repair costs of the old equipment, and so on.

Hence, the purchase price of the old equipment would not be relevant to the decision.

Answer 7

Chapter 11, Problem 1Q

To determine

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment.

Answer 8

Expert Solution & Answer

Explanation of Solution

Describe the meaning of relevant costs and provide examples for the decision of repairing or replacing a piece of equipment:

Relevant cost: Relevant cost is a future cost that fluctuates across alternatives. The future cost is a relevant cost and past cost is an irrelevant cost.

The relevant costs for replacing equipment would include the following: