Costs that differ between alternatives are called:
A) sunk costs.
B) irrelevant costs.
C) relevant costs.
D) unavoidable costs.

Question

Quizplus · Accepted Answer

Relevant costs are costs that differ between alternatives and have an impact on the decision-making process. Sunk costs (A) are costs that have already been incurred and cannot be recovered, so they are not relevant to future decisions. Irrelevant costs (B) do not differ between alternatives, so they do not affect the decision-making process. Unavoidable costs (D) are costs that cannot be avoided regardless of the decision made, so they are not relevant to the decision-making process. Therefore, the best choice for costs that differ between alternatives are relevant costs (C).

Costs That Differ Between Alternatives Are Called