Which is an example of a sunk cost in a long term decision

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Problem 1: Which of the following is an example of a sunk cost in a long term decision regarding the replacement of an existing piece of equipment with new equipment?

Option 1: The cost of the new equipment

Option 2: The additional working capital requirement for the new equipment

Option 3: The current net book value of the equipment to be replaced

Option 4: The disposal (salvage) value of the equipment to be replaced

Problem 2: A large favorable material price variance is:

Option 1: a signal that an investigation of purchasing activities and/or standard prices is needed

Option 2: a signal that an investigation of production activities is needed

Option 3: proof that the production department is doing a good job

Option 4: proof that the purchasing department is doing a good job

Reference no: EM132796746

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