Answer:
Explanation:
For a cost to be relevant it has to be futuristic and not past
A relevant cost can be said to be a cost or costs that will be incurred as a result of a particular make or buy decision, and which will change in the future as a result of that decision.
A) The machinery used to produce the magnet was purchased five-years ago for $500,000.
<em>IRRELEVANT</em>
<em>A relevant cost is a cost or costs that will be incurred as a result of the decision, and which will change in the future as a result of that decision. In this case, the machine has already been bought.</em>
B) Four of the employees who produce magnets would be reassigned to the magnifying glass division.
<em>RELEVANT</em>
<em>A relevant cost is a cost or costs that will be incurred as a result of the decision, and which will change in the future as a result of that decision. In this case, the employees will be reassigned which implies that the cost of their salaries will be a cost to be borne when they employ new hands.</em>
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C) The space now used to produce the magnets would be used to eliminate the need to rent warehouse space.
<em>RELEVANT</em>
<em>A relevant cost is a cost or costs that will be incurred as a result of the decision, and which will change in the future as a result of that decision. In this case, the space will be reassigned which implies that the cost of their rent will be a cost not to be saved.</em>
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D) Sales volume (units) is estimated to drop by 50% once the competitor becomes fully operational.
<em>RELEVANT</em>
<em>A relevant cost is a cost or costs that will be incurred as a result of the decision, and which will change in the future as a result of that decision. In this case, the revenue will be reduced by 50% which implies that the inflow of sales will be half the original amount going forward. This is futuristic and hence relevant</em>
