Question
1-2. Martin Machinery Company is a manufacturer of machine parts. It invested $400,000 six months ago to upgrade its accounting system to process routine accounting
1-2. Martin Machinery Company is a manufacturer of machine parts. It invested $400,000 six months ago to upgrade its accounting system to process routine accounting transactions. The company is considering outsourcing its routine accounting and eliminating most of its accounting staff. 1. Should the $400,000 spent six months ago be considered to be a relevant cost in evaluating the outsourcing decision? A. Yes, all of the $400,000 is a relevant cost B. No, none of the $400,000 is a relevant cost C. Only the undepreciated part of the $400,000 is relevant D. Only the mortgaged or financed part of the $400,000 is relevant 2. If Martin Machinery outsources its routine accounting, which of the following costs is most likely to be avoidable? A. Annual auditing costs for its external financial reports B. Direct costs of accounting staff processing routine accounting transactions C. Rental cost for the corporate office building D. Salary paid to the vice president of finance
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