Question

A manufacturer of winter outerwear experiences seasonality in demand and production. Its machines have very low utilization in the months of March through June. The company is considering developing new markets in the southern hemisphere, where seasons are reversed. Which of the following considerations would NOT be relevant to the decision to expand the market to increase machine utilization? a. Wages paid to workers b. Depreciation of machines c. Plant set-up cost to accommodate fashions popular in the new market d. Price offered in the new market

Answer 1

Answer: (B) depreciation of machine

Explanation: machine depreciation will not differ regardless of the decision, therefore it is not a relevant cost