Select the correct statement regarding relevant costs and revenues.
A) Sunk costs are relevant for decision-making purposes.
B) Relevant costs are frequently called unavoidable costs.
C) Direct labor is an example of a unit-level cost.
D) Only variable costs are relevant for decision making.

Question

Quizplus · Accepted Answer

Direct labor is an example of a unit-level cost, which is a type of relevant cost that varies based on the level of production or output. Sunk costs, on the other hand, are not relevant for decision-making as they are historical costs that cannot be changed or recovered. Relevant costs are future costs that will be affected by a decision and can include both variable and fixed costs that are avoidable.

Select the Correct Statement Regarding Relevant Costs and Revenues