For a cost to be relevant,it must:
A)differ between decision alternatives.
B)have already been incurred.
C)not influence a decision.
D)not be a differential cost.

Question

Quizplus · Accepted Answer

A cost is only relevant if it differs between decision alternatives because this difference will have an impact on the decision being made. If a cost is not different between options, it is not considered relevant as it does not provide any useful information for decision-making purposes. Costs that have already been incurred (B) are sunk costs and are not relevant because they cannot be recovered. Costs that do not influence a decision (C) are not relevant because they have no impact on the potential outcomes of a decision. Differential costs (D) are relevant costs because they represent the difference in costs between two alternatives.

For a Cost to Be Relevant,it Must