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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › relevant
A machine owned by a company has been idle for some months but could now be used on a
one year contract which is under consideration. The net book value of the machine is $1,000. If
not used on this contract, the machine could be sold now for a net amount of $1,200. After use on
the contract, the machine would have no saleable value and the cost of disposing of it in one year’s
time would be $800.
what is the relevant cost
sir i am unable to understand how to calculate this
The cash effect of using the machine is the 1,200 they will not get because they will not be selling it now, plus the 800 that they will later have to pay to dispose of it.