Variable costs will generally be relevant for decision making because they:
A) Differ between decision options.
B) Are volume-based.
C) Have not been committed and are likely to differ between decision alternatives.
D) Differ between decision options and have been committed.
E) Measure opportunity cost.

Question

Quizplus · Accepted Answer

Variable costs are those costs that vary with production or sales volume and have not yet been committed. As decision making involves choosing between different alternatives, variable costs will generally be relevant because they can differ between options and affect the overall profitability of each alternative. Also, committed costs (such as fixed costs) are not relevant for decision making because they cannot be changed, while variable costs can be controlled and reduced.

Variable Costs Will Generally Be Relevant for Decision Making Because