Consider a decision facing a firm of either accepting or rejecting a special offer for one of its products.Which of the following costs is NOT relevant?
A) Direct materials.
B) Variable overhead.
C) Fixed overhead that will be avoided if the special offer is accepted.
D) Common fixed overhead that will continue if the special offer is NOT accepted.

Question

Quizplus · Accepted Answer

Common fixed overhead that will continue regardless of the decision is not relevant because it does not change based on the acceptance or rejection of the special offer.

Consider a Decision Facing a Firm of Either Accepting or Rejecting