When are costs relevant to a particular decision?
A)If they are fixed costs
B)If they differ across the alternatives being considered
C)If they are variable costs
D)If they remain unchanged across the alternatives being considered

Question

Quizplus · Accepted Answer

Costs are relevant to a decision when they differ across the alternatives being considered. If the costs are the same across all alternatives, then they do not play a role in the decision-making process. However, if there are differences in costs between alternatives, they must be considered to make an informed decision. Fixed costs are irrelevant to this particular decision as they do not change with the level of activity. Variable costs may still be relevant if they differ between alternatives.

When Are Costs Relevant to a Particular Decision