For the past 10 years, Husky Company has produced the small gas motors that fit into its main product line of weed cutting machines. As material costs have steadily increased, the Controller of Husky Company is reviewing the decision to continue to make the small motors and has identified the following facts:

1)


The equipment used to manufacture the gas motors has a book value of $350,000.

2)


The space now occupied by the gas motor manufacturing department could be used to eliminate the need for storage space now being rented.

3)


Comparable units can be purchased from an outside supplier for $89.95.

4)


Five of the persons who work in the gas motor manufacturing department would be terminated and given eight weeks' severance pay.

5)


A $25,000 unsecured note is still outstanding on the equipment used in the manufacturing process.

Which of the items above are relevant to the decision that the controller has to make?




1. 1, 3, and 4

2. 2, 3, and 4

3. 2, 3, 4, and 5

4. 1, 2, 4, and 5