Relevant (i.e., differential) cost analysis:
A) Takes all variable and fixed costs into account to analyze decision alternatives.
B) Considers only variable costs as these are the costs that change with each decision alternative.
C) Considers only nonfinancial and strategic factors associated with each decision alternative.
D) Considers all variable and fixed future costs that change with each decision alternative.
E) Allows the decision maker to group all types of costs together to facilitate decision making.

Question

Quizplus · Accepted Answer

Relevant cost analysis focuses on the future costs that will change as a result of a decision. This includes both variable and fixed costs, as long as they are expected to change due to the decision being made.

Relevant (I.e., Differential) Cost Analysis