Which term reflects future costs that differ across alternatives?
A) sunk costs
B) relevant costs
C) variable costs
D) opportunity costs

Question

Quizplus · Accepted Answer

Relevant costs are future costs that differ across alternatives and are the costs that should be considered when making decisions. Sunk costs (A) are costs that have already been incurred and cannot be recovered, so they are not relevant to future decisions. Variable costs (C) are costs that vary with changes in production or sales volume, and while they may be relevant for some decisions, they do not reflect future costs that differ across alternatives. Opportunity costs (D) are the benefits foregone by choosing one alternative over others and should also be considered in decision-making, but they do not reflect future costs.

Which Term Reflects Future Costs That Differ Across Alternatives