Question

A company replaces an old machinary with salvage value of rs 1,00,000 replaced by a machinary costing 5,00,000 the relevant cash flow for evaluation of this project is?

Answer 1

Variable costs are costs that change in proportion to the good or service that a business produces.[1] Variable costs are also the sum of marginal costs over all units produced. They can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Direct costs, however, are costs that can easily be associated with a particular cost object.[2] However, not all variable costs are direct costs. For example, variable manufacturing overhead costs are variable costs that are indirect costs, not direct costs. Variable costs are sometimes called unit-level costs as they vary with the number of units produced.

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