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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › relevant cost of machines
can you please help me?
A company purchased a machine several years ago for £50,000. Its written down value is now £10,000. The
machine is no longer used on normal production work and it could be sold now for £8,000.
A one-off contract is being considered which would make use of this machine for six months. After this time the
machine would be sold for £5,000.
What is the relevant cost of the machine to the contract?
A £2,000
B £3,000
C £5,000
D £10,000
If they do the contract, they are receiving scrap of 5000, but they are losing the scrap of 8000 that they could have received now if they had not done the contract.
So the relevant cost is the difference of 3000.
Thank you
You are welcome 🙂