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6 August, 21:16

Swifty Corporation spent $4400 to produce Product 89, which can be sold as is for $5500, or processed further incurring additional costs of $1650 and then be sold for $7700. Which amounts are relevant to the decision about Product 89

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  1. 7 August, 01:11
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    Relevant:

    $5,500

    $1,650

    $7,700

    Explanation:

    The only data irrelevant is the first production cost. The $4,400 is not relevant because it is a sunk cost. It will remain constant in both choices. The other costs and income are relevant because they vary on each decision. The $4,400 should not be a part of the decision making process.
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