Mike’s Bikes is thinking about discontinuing the production of their spokes for their bikes and instead purchasing them from an outside vendor. Mike’s just purchased a piece of equipment that cost $50,000 to make the spokes that has no resale value and will be obsolete if they quit making the line. This cost would need to be:
A) Should be rolled into overhead and allocated to both sides of the decision.
B) Should be added to the cost of making when looking at the decision.
C) Considered a sunk cost, so it is not relevant to the decision.
