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Relevant cost question

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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October 16, 2014 at 5:29 am #204550
mansoor
Participant
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Salary to be paid to a market researcher who will oversee the development of a new product. this is a new post to be created especially for the new product but the 12,000 salary will be fixed cost. is this cost relevant to the decision to proceed with the development of the product.
the text answer is RELEVANT
I answered IRRELEVANT, arguing that this was a committed cost.
what is wrong with my argument?
thanks
October 16, 2014 at 3:36 pm #204601
John Moffat
Keymaster
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Since this is a new post to be created especially for the new product, it is a cost that will only occur if we do go ahead with the new product.
It is not committed – it is ‘to be created’. If we do not do the new product then we will not create it.
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