• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Short term decision making

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Short term decision making

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Ken Garrett.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 20, 2024 at 2:01 pm #704341
    Syeda.aiman.ali
    Participant
    • Topics: 14
    • Replies: 0
    • ☆

    Machinery owned by a company is not currently in use but could be used on a short-term contract. The net book value of the machinery is 2000 . If it is not used on this new contract, the machinery could be sold for 2000. After use on the contract, there would be no resale value and the cost of disposal would be 900.
    What is the relevant cost of the machinery to the contract?
    A) 2000
    B)3100
    C)2200
    D)1300
    Explain please ..

    April 20, 2024 at 6:16 pm #704352
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10589
    • ☆☆☆☆☆

    If the contract is not undertaken the machinery could be sold now for 2000: a cash inflow. (NBVs and historical costs are irrelevant in decision making.)

    If used on the contract there is no resale, but a cost of 900: A cash outflow.

    The difference in cash flows is 2900 so that is the relevant cost: the change in cash flow caused by the decision.

    So either all of the proffered answers are wrong or you have mistyped a figure in your query.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • nabeelafatima on Using Information Systems – ACCA Performance Management (PM)
  • John Moffat on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • Fangzi on The cost of capital (part 1) – ACCA (AFM) lectures
  • Coffeeice6 on What is Assurance? – ACCA Audit and Assurance (AA)
  • khalid.zaheer on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in