E7.18(LO1,2,3,4,5,6),CThe costs listed below relate to a variety of different decision situations.

Identify relevant costs for different decisions.

Cost

Decision

1. Unavoidable fixed overheadEliminate an unprofitable segment2. Direct laborMake or buy3. Original cost of old equipmentEquipment replacement4. Joint production costsSell or process further5. Opportunity costAccepting a special order6. Segment manager's salaryEliminate an unprofitable segment (manager will be terminated)7. Cost of new equipmentEquipment replacement8. Incremental production costsSell or process further9. Direct materialsEquipment replacement (the amount of materials required does not change)10. Rent expensePurchase or lease a building

Instructions

For each cost listed above, indicate if it is relevant or not to the related decision. For those costs determined to be irrelevant, briefly explain why.