Relevant cost analysis involves focusing on only those costs and revenues that differ from a benchmark option.

Question

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Relevant cost analysis involves comparing only the costs and revenues that vary between alternative courses of action. It focuses on the future costs and revenues that differ between options, and only those costs and revenues that are relevant to the decision at hand are analyzed. This approach helps in making better decisions by providing a clear understanding of the incremental costs and benefits associated with each option.

Relevant Cost Analysis Involves Focusing on Only Those Costs and Revenues