A relevant cost

1) Differs between the alternatives in a decision

2) Occurs in the future

For each of the following costs and decisions decide whether the cost is relevant or not relevant.

Cost		Decision
Unavoidable fixed overhead		Eliminate an unprofitable segment
Direct labour		Make or buy
Original cost of old equipment		Replace equipment
Joint production costs		Sell or process further
Opportunity cost		Accept a special order
Segment manager's salary		Eliminate an unprofitable segment (The manager will be terminated)
Cost of new equipment		Replace equipment
Incremental production costs		Sell or process further
Direct materials		Replace equipment (The amount of materials required does not change)
Rent expense		Purchase or lease a building