Multiple Choice
A manager invests $20,000 in equipment that would help the company reduce it's per unit costs from $15 to $12.He expects the equipment to be in use for the next seven years.After two years,he realizes that if he outsourced the production,the unit cost would be $7 instead.At this point what should the senior manager do?
A) Charge the manager for the next five years of depreciation
B) Write off the equipment as sunk cost and allow for outsourcing since it is cheaper
C) Not allow for outsourcing since the equipment is good for another five years
D) None of the above
Correct Answer:
Verified
Correct Answer:
Verified
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