Asked by
Twanisha Joshua
on Dec 05, 2024Verified
Which of the following statements is true of relevant costs?
A) Variable costs are always relevant.
B) Sunk costs are never relevant.
C) If costs are the same under two alternatives, they are not relevant.
D) Sunk costs are never relevant AND if costs are the same under two alternatives, they are not relevant.
Relevant Costs
Costs that are directly related to a specific management decision and that will change as a result of that decision.
Sunk Costs
Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.
Alternatives
Different options or strategies available for achieving a goal or solving a problem, often considered during decision-making processes.
- Discriminate between sunk costs, opportunity costs, and relevant costs to inform decision-making.
Verified Answer
AM
Learning Objectives
- Discriminate between sunk costs, opportunity costs, and relevant costs to inform decision-making.