Question 4 Reason for treatment of income/ cost chosen Note The cost of £18,000 is sunk and will not be affected by the decisions; it is therefore not relevant. If the tender is successful, this material will be not be available for making luxury document, thereby requiring £9,000 to be spent on material. As this is a direct consequence of the new order, it is a relevant cost. The original cost £4,000 is sunk. The replacement of the material is an incremental cost is £6,500 and therefore it…
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