Only future costs that differ between alternatives are relevant in decision making.

Question

Quizplus · Accepted Answer

Only future costs that differ between alternatives are relevant in decision making because these are the costs that will actually impact the decision and make one alternative more favorable than another. Past costs and sunk costs (costs that have already been incurred and cannot be recovered) should not be taken into consideration when making a decision because they are no longer relevant to the future outcomes.

Only Future Costs That Differ Between Alternatives Are Relevant in Decision