Which of the following is not true regarding the determination of relevant costs and relevant revenues associated with quality-related initiatives (such as the move to JIT production)?
A) Relevant costs are defined as future costs that differ between and among decision alternatives.
B) Relevant costs exclude opportunity costs since these costs are not normally recorded by accounting systems.
C) Relevant costs include all "avoidable" costs.
D) Long-term effects of relevant costs and relevant revenues are usually assessed using discounted cash flow (DCF) capital budgeting decision models.
E) Relevant revenues could include the contribution margin associated with increased sales (because of decreased cycle times associated with JIT).

Question

Quizplus · Accepted Answer

This statement is false because opportunity costs should be included in relevant costs as they represent the value of the next best alternative that is foregone as a result of the decision. All other statements are true. Relevant costs and revenues are important in evaluating the financial impact of quality-related initiatives such as JIT production, as they help determine whether the benefits of the initiative outweigh the costs.

Which of the Following Is Not True Regarding the Determination