Which costs are important when making a decision between two alternatives?

Question

Quizplus · Accepted Answer

When deciding between two alternatives, it is important to consider only relevant costs. Variable costs may not be relevant if the decision alternatives have the same activity levels because they will be the same for both alternatives. Sunk costs, which are costs that have already been incurred and cannot be recovered, should not be considered because they are not relevant to the decision at hand. Fixed costs are often relevant because they will differ between the alternatives and can impact the decision.

Which Costs Are Important When Making a Decision Between Two