In relevant-cost analysis, managers should not consider all variable as relevant and all fixed costs as irrelevant.

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Quizplus · Accepted Answer

Relevant-cost analysis involves identifying the costs and benefits that are directly affected by a decision, and ignoring irrelevant costs and benefits. In this context, both variable and fixed costs may be relevant or irrelevant depending on the decision being made. Therefore, managers should not automatically assume that variable costs are relevant and fixed costs are irrelevant, but rather analyze each cost in the context of the specific decision being made.

In Relevant-Cost Analysis, Managers Should Not Consider All Variable as Relevant