Estimated future costs that differ between alternative courses of action are termed as __________ costs in management decision analysis.
A)sunk
B)relevant
C)absorption
D)replacement

Question

Quizplus · Accepted Answer

Relevant costs are the costs that are important or relevant in making the decision between alternative courses of action. Sunk costs (A) are not relevant as they are costs that have already been incurred and cannot be recovered. Absorption costs (C) are a method of allocating all costs, including fixed and variable, to calculate the cost of a product or service which may not be relevant in making a particular decision. Replacement costs (D) may be relevant in certain decisions, but not in all cases.

Estimated Future Costs That Differ Between Alternative Courses of Action