Coral Corporation is evaluating a proposal to supply warehouse space to a potential customer as well as
Question:
Coral Corporation is evaluating a proposal to supply warehouse space to a potential customer as well as maintain all the required warehouse records. Coral has a storage barn not currently in use; however it will require the installation of additional shelving and a special concrete pad for delivery truck access. Coral’s existing accountant will assume the additional accounting duties and receive an additional $8,000 per annum. The potential customer will pay a fee to Coral based on the volume of product stored.
Required:
Which of the following items is not a relevant consideration in deciding whether Coral should provide the warehouse space to the potential customer?
1. Original purchase price of the storage barn.
2. Projected volume of product for storage
3. The 8,000 increase in the accountant’s annual salary.
4. Allocation of administrative salaries.
Step by Step Answer:
Introduction to Managerial Accounting
ISBN: 978-1259105708
5th Canadian edition
Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan