Question

In considering whether to accept a special order at a price less than the normal selling price of the product, but the additional sales will make use of presently idle capacity, which of the following costs will not be relevant? Direct labor. Variable overhead. Direct materials. Depreciation of the manufacturing plant. Fixed manufacturing overhead that can be avoided.

Answer 1

Depreciation of the manufacturing plant.

Step-by-step explanation:

Depreciation is a fixed cost. The depreciation cost of an asset is an annual expense. Usually, it is the same amount throughout the useful life of the asset.

In considering the particular order, the depreciation cost of the plant should not be a factor. Whether the order is accepted or not, the depreciation cost of the plant will still be the same.