With respect to a decision, a relevant cost is:
A) one that does not change if the decision to go ahead is made.
B) one that changes if the decision to go ahead is made.
C) one that does not change if the decision not to go ahead is made.
D) All costs currently incurred by the organisation are relevant.

Question

Quizplus · Accepted Answer

A relevant cost is one that changes if the decision to go ahead is made. These costs are important to consider when making a decision because they directly impact the financial outcome of the decision. Costs that do not change, regardless of the decision made, are irrelevant and should not be considered in the decision-making process. Therefore, choice B is the correct answer.

With Respect to a Decision, a Relevant Cost Is