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Indicate whether the cost given in the table may be relevant in decisions faced by...

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Accounting

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Indicate whether the cost given in the table may be relevant in decisions faced by the management of Svahn, AB, a Swedish manufacturer of sailing yachts, in the following situations (part (1) relates to case 1; part (2) relates to case 2): Required: 1. Management is considering purchasing a Model B300 machine to use in addition to the company's present Model B100 machine. This would increase the company's production and sales. The increase in volume would be large enough to require increases in fixed selling expenses and in general administrative overhead but not in fixed manufacturing overhead. 2. Management is instead considering replacing its present Model B100 machine with a new Model B300 machine. The Model B100 machine would be sold. This change would have no effect on production or sales, other than some savings in direct materials costs due to reduced waste

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