Question

Barnum Enterprises is considering updating its computers with faster models that would aid in processing its sales invoices​ faster, and eliminate any overtime processing. Identify whether each item below would be relevant or irrelevant to the manager when making the decision to replace or not replace. 1. Orginal cost of computer being considered for replacement. A. Relevant B. Irrelevant 2. Accumulated depreciation taken on old computer being considered for replacement. A. Relevant B. Irrelevant 3. Estimated annual operating costs of the new computer being considered for purchase. A. Relevant B. Irrelevant ​4.Trade-in value received for old computer being considered for replacement. A. Relevant B. Irrelevant

Answer 1

Answer:The answer is in the explanatory column

Explanation: The items considered relevant and irrelevant for Barnum Enterprise to make decision whether to replace or not is given

1. Orginal cost of computer being considered for replacement----Relevant

2. Accumulated depreciation taken on old computer being considered for replacement-----Irrelevant

3. Estimated annual operating costs of the new computer being considered for purchase---- Relevant

​4.Trade-in value received for old computer being considered for replacement----- Irrelevant

 Any Costs that were incurred in the past and cannot be changed is irrelevant  and termed sunk costs.

Expected future costs which differ among alternatives are relevant and should be considered