Not a Relevant Concern

A

The product analysis cost is considered a sunk cost and is not relevant.

To determine the incremental cash flows for a new product, it is important to consider the relevant factors that will impact the cash flows associated with the project. The question asks you to identify which option is not considered a relevant concern in determining these incremental cash flows. Let's go through each option:

A. The cost of a product analysis completed in the previous tax year and specific to the new product. This option is relevant because the cost of product analysis is an expense incurred specifically for the new product. It is important to consider this cost as it will impact the cash flows associated with the new product.

B. All of these are relevant. This option suggests that all the factors mentioned are relevant concerns in determining the incremental cash flows for a new product. If this option were correct, it would mean that all the factors mentioned in the question are relevant. However, the question asks for the option that is not considered a relevant concern. Therefore, option B is not the correct answer.

C. The use of factory floor space which is currently unused but available for production of any product. The use of factory floor space is relevant because it represents an opportunity cost. If the space is currently unused but available, using it for the new product may prevent its use for other potential products, which could affect their cash flows. Therefore, this option is a relevant concern.

D. Shipping and installation costs associated with preparing the machine to be used to produce the new product. Shipping and installation costs are relevant because they are directly associated with the new product and will affect the initial cash outflows of the project. These costs need to be considered to determine the total investment required for the new product.

E. Revenues from the existing product that would be lost as a result of some customers switching to the new product. This option is also relevant because it addresses the potential impact on cash flows from the existing product. If some customers switch to the new product, it could lead to a decrease in revenues from the existing product, which should be taken into account in the analysis.

In summary, among the given options, the answer that is not considered a relevant concern in determining incremental cash flows for a new product is option B.