Under activity-based costing, the concepts underlying relevant-costing analysis are not valid because they may derive conclusions that are different than those obtained with conventional cost analyses.

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Activity-based costing (ABC) and relevant-costing analysis are both valid approaches; they simply focus on different aspects of costing. ABC allocates overhead costs based on activities that drive costs, while relevant-costing focuses on costs that will change as a result of a decision. Both can be used to derive accurate and useful financial information for decision-making.

Under Activity-Based Costing, the Concepts Underlying Relevant-Costing Analysis Are Not