1. Explain whether past costs play any role in relevant costing decisions.
2. Discuss whether depreciation on an existing asset is always relevant or irrelevant in decision making.
3. Explain whether the salary of the supervisor of an assembly line with excess capacity is an example of relevant or irrelevant future cost for an accept-or-reject decision.
4. Can direct materials ever be irrelevant in a make or buy decision? Explain.
5. Specific Water Company produces water bottles. It has been asked by a large retail shop to supply water bottles which would be libelled in the name of the retail shop. The retail shop would pay Specific Water Company a price of $25 per bottle. However, its regular price is $26. If Specific Water Company agrees to sell water bottles to the retail shop at a price of $25, what type of relevant costing decision would you call this? Is it possible to make net benefit (earnings) by selling at a price lower than the regular price? What other reasons might motivate to sell at a price below regular price?