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Which of the following is NOT a relevant factor when determining incremental cash flows for a new product?

a. The use of high quality factory floor space that is currently unused and therefore could be used to produce the proposed new product.

b. Revenues from an existing product that would be lost as a result of customers switching to the new product.

c. Shipping and installation costs associated with preparing a machine which would be used to produce the new product.

d. The cost of a marketing study that was completed last year related to the new product. This research led to the tentative decision to go ahead with the new product, and the cost of the research was expensed for tax purposes last year.

e. The land which would be used for the new project could be sold to another firm.

Basic Finance, Finance

  • Category:- Basic Finance
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