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relevant costing

This topic has 3 replies, 2 voices, and was last updated 12 years ago by seagoat.

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November 26, 2012 at 11:34 am #55762
christine71
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- Topics: 17
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Hi, whether some one can help to identify the following are relavant or not relavant :
Let said a machinery cost 40k , depreciated 10k p.a., could be scrapped for 8k, currently using and will expected cash flow is 15k.
Knowing that cost and depreciation will not the concern of relavant costing but how about scrap value of 8k ?
Please advice.
Tq.
Christine
November 26, 2012 at 12:15 pm #108760
seagoat
Member
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Scrap value is an opportunity cost it is therefore relevant.
November 27, 2012 at 4:04 am #108761
christine71
Member
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- Replies: 22
Thanks Seagoat, one more query, how about replacement cost for the machine let said 50k , will replacement cost consider too ?
November 27, 2012 at 10:59 am #108762
seagoat
Member
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Replacement cost will 50 k but less the scrap value of 8k so 42k.
Maybe the machine could be repaired. If the cost of repair is less than 42 then it is worth to repair rather to replace.
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