26. An example of a sunk cost (irrelevant cost) in a capital budgeting decision for...
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26. An example of a sunk cost (irrelevant cost) in a capital budgeting decision for the potential purchase of a new airplane by Southwest Airlines is a. increase in working capital required. b. the book value of the old airplane c. the delivery costs on the new airplane. d, increase in fuel costs to operate the new airplane e.. all of the above are examples of sunk costs. 27. In the analysis of a capital budgeting proposal, for which of the following items are there no income tax consequences? a. Cash revenue from operations b. Gain or loss on the disposal of the asset c. Release of working capital at the end of the project d. Cash expense from operations e. There are no income tax consequences of any of the above. 28. Which of the following would NOT be considered in a make-or-buy decision? a. Fixed costs that will no longer be incurred b. Variable costs of production c. Potential rental income from space occupied by the production area d. Unchanged supervisory costs
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