Future costs that differ across alternatives are referred to as:
A)sunk costs.
B)relevant costs.
C)marginal costs.
D)period costs.

Question

Quizplus · Accepted Answer

Relevant costs are future costs that differ across alternatives and are used to make decisions. Sunk costs (A) are past costs that cannot be changed or recovered and are irrelevant in decision making. Marginal costs (C) are the additional costs incurred by producing one additional unit and may be relevant or irrelevant depending on the decision context. Period costs (D) are expenses that are not directly tied to production and are irrelevant in decision making.

Future Costs That Differ Across Alternatives Are Referred to As