Which of the following costs are relevant in the decision to drop a business unit?
A) Unavoidable Costs
B) Avoidable Costs
C) Both of the above
D) None of the above

Question

Quizplus · Accepted Answer

Avoidable costs are relevant in the decision to drop a business unit because these are the costs that would not be incurred if the unit is dropped. Unavoidable costs, on the other hand, will still be incurred regardless of the decision and therefore are not relevant to this specific decision-making process.

Which of the Following Costs Are Relevant in the Decision