Consider the following scenario:

A company is planning to make a new product P5. So far 100,000 has been spent on surveys and plans relevant to the production of P5.

Sales of the new product are anticipated to generate annual contribution of 550,000

A machine which can manufacture the new product will cost 1.5 million.

It has a life of 5 years and a scrap value of 300,000

The company uses straight line depreciation.

The machine will need to be located in a factory with annual overheads of 120,000

A consultant will be employed to oversee the production of P5 at an annual cost of 60,000

The factory is currently used to make product P4 which generates 400,000 contribution annually.

The factory can only house one machine.

For each cost identified below, match the description to say what type of cost is is and if it is relevant or not

(You may use answers more than once or not al all)

- A. B. C. D. E. F. G. H.	100,000 on surveys and plans
- A. B. C. D. E. F. G. H.	550,000 Contribution from sales of new product P5
- A. B. C. D. E. F. G. H.	Cost of the new machine 1.5 million
- A. B. C. D. E. F. G. H.	Scrap value of machine 300,000
- A. B. C. D. E. F. G. H.	Annual deprecation
- A. B. C. D. E. F. G. H.	Annual overheads 120,000
- A. B. C. D. E. F. G. H.	400,000 contribution from old product P4
- A. B. C. D. E. F. G. H.	60,000 annual cost of the consultant

A.	Committed cost - NOT relevant
B.	Opportunity cost. NOT Relevant
C.	Sunk cost - relevant
D.	Future cash flow - NOT relevant
E.	Sunk cost - NOT relevant
F.	Future cash flow - Relevant
G.	Not cashflow - NOT relevant
H.	Opportunity cost - Relevant