Question

When choosing between two alternatives, such as replacing or not replacing the machine, do not include _______ costs in the analysis because these costs will be the same under each alternative.

Answer 1

Answer:

Head Office Cost Allocations

Explanation:

Usually Projects have Head Office costs that are allocated to them.

Head office costs allocated to projects will be the same for the choices of alternatives (replacing or not replacing the machine).

The Head office costs are a costs that is incurred at Head office as well.

Thus, Head Office Costs allocations are irrelevant and must not be included in the analysis.