A number of costs are listed below that may be relevant in decisions faced by the management of a Saudi furniture manufacturing Company.

Item Information

Relevant Irrelevant

Sales revenue

Direct materials

Direct labor

Variable manufacturing overhead

Book value$$Model A$3000$ machine

Disposal value$$Model A$3000$ machine

Market value$$Model B$3800$ machine $($cost$)$

Fixed manufacturing overhead $($general$)$

Variable selling expense

Fixed selling expense

General administrative overhead

The company chronically runs at capacity and the old Model A$3000$ machine is the company$$s constraint. Management is considering the purchase of a new Model B$3800$ machine to use in addition to the company$$s present Model A$3000$ machine. The old Model A$3000$ machine will continue to be used to capacity as before, with the new Model B$3800$ being used to expand production. The increase in volume will be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in the general fixed manufacturing overhead.