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ABC company chronically runs at capacity, and the old Model A 3 0 0 0 machine is the company's constraint. Management is considering purchasing a
ABC company chronically runs at capacity, and the old Model A machine is the company's constraint. Management is considering purchasing a new Model B machine to use in addition to the Model A machine. The old Model A machine would continue to be used to capacity as before, with the new Model B being used to expand production. The increase in volume would be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in the general fixed manufacturing oventead.
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Determine whether the revenue or cost items listed are relevant or not relevant for management decision making.
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