Which one of the following costs would be relevant in short-term decision-making?
A)Incremental fixed costs.
B)All costs of inventory.
C)Total variable costs that are the same in the considered alternatives.
D)Costs of fixed assets to be used in the alternatives.

Question

Quizplus · Accepted Answer

Short-term decision-making involves making decisions for a limited period of time, such as a few months or a year. Incremental fixed costs, which are the costs that increase or decrease when production increases or decreases, are relevant in short-term decision-making as they can impact the profitability of an alternative in the short term. All costs of inventory, costs of fixed assets to be used in the alternatives, and total variable costs that are the same in the considered alternatives are not relevant in short-term decision-making.

Which One of the Following Costs Would Be Relevant in Short-Term