The following costs relate to a variety of different decision situations.

Instructions

For each cost listed above, indicate if it is relevant or not to the related decision. For those costs determined to be irrelevant, briefly explain why.

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Cost Decision 1. Unavoidable fixed overhead Eliminate an unprofitable segment 2. Direct labor Make or buy 3. Original cost of old equipment Equipment replacement 4. Joint production costs Sell or process further Cost Decision 5. Opportunity Accepting a special order Eliminate an unprofitable segment (manager will be terminated) cost 6. Segment manager's salary 7. Cost of new equipment Equipment replacement 8. Incremental production costs Sell or process further 9. Direct materials Equipment replacement (the amount of materials required does not change) Purchase or lease a building 10. Rent expense