The Shoe Box is considering adding a new line of winter footwear to its product

Question

The Shoe Box is considering adding a new line of winter footwear to its product lineup. Which of the following are relevant cash flows for this project?

I. Decreased revenue from products currently being offered if this new footwear is added to the lineup

II. Revenue from the new line of footwear

III. Money spent to date looking for a new product line to add to the store’s offerings

IV. Cost of new counters to display the new line of footwear

A) I and IV only

B) II and IV only

C) II and III only

D) I, II, and IV only

E) All of them are relevant.

Explanation / Answer

correct option is "D" -I ,II and IV only

III-money spent to date is a sunk cost which is incurred in past so it is not a relevant cost to be considered,all other cost are relevant

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