A company has spent $5,000 on a report into the viability of using a subcontractor.
The report highlighted the following:
A machine purchased six years ago for $30,000 would become surplus to requirements. It has a written-down value of $10,000 but would be resold for $12,000.
A machine operator would be made redundant and would receive a redundancy payment of $40,000.
The administration of the subcontractor arrangement would cost the company $25,000 each year.
Which THREE of the following are relevant for the decision? (Choose three.)
A . A relevant cost of $5,000 for the viability report.
B . A relevant cost of $30,000 for the machine.
C . A relevant cost of $40,000 for the redundancy payment.
D . A relevant cost of $10,000 for the machine.
E . A relevant cost of $25,000 each year for administration.
F . A relevant revenue of $12,000 for the machine.
Answer: A,D,E
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