An Irrelevant Cost

question 97

Multiple Choice

An irrelevant cost:

• A)is also called a differential cost.
• B)must differ between decision alternatives.
• C)must be incurred in the future rather than in the past.
• D)will not influence a decision.

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Definitions:

Cost Formula

This is an equation used to predict the total costs associated with producing a certain number of units or providing a certain level of service.

Variable Costs

Expenses that vary directly with changes in production volume, including costs like raw materials and some labor expenses.

Fixed Costs

Costs that do not vary with the level of production or sales volume.

Relevant Range

The range of activity within which assumptions about variable and fixed cost behavior are valid.