Which of the following is an appropriate step when identifying relevant costs to make a business decision?
A) assuming all variable costs are relevant
B) assuming all fixed costs are irrelevant
C) separating total costs into business function costs and full costs
D) separating total costs into variable and fixed components

Question

Quizplus · Accepted Answer

Separating total costs into variable and fixed components is an appropriate step when identifying relevant costs to make a business decision. Assumptions that all variable costs are relevant or all fixed costs are irrelevant may lead to incorrect decisions. Separating total costs into business function costs and full costs is also not relevant to identifying relevant costs for a specific decision.

Which of the Following Is an Appropriate Step When Identifying