A cost that will differ according to the alternative activity being considered is called a(n):
A) sunk cost.
B) allocated cost.
C) differential cost.
D)opportunity cost.

Question

Quizplus · Accepted Answer

A cost that will differ according to the alternative activity being considered is called a differential cost. This cost is relevant in decision-making as it helps in comparing the costs and benefits of different alternatives. Sunk cost (A) is a cost that has already been incurred and cannot be recovered, allocated cost (B) is a shared cost that is assigned to a specific activity or department, and opportunity cost (D) is the benefit foregone by choosing one alternative over another.

A Cost That Will Differ According to the Alternative Activity