Which of the Following Are Potential Problems Managers Face in Relevant-Cost

question 62

Multiple Choice

Which of the following are potential problems managers face in relevant-cost analysis?

• A) Including only relevant costs and relevant revenues in an analysis
• B) incorrect assumptions such as all variable costs are relevant and all fixed costs are not
• C) considering past historical costs when making predictions about future costs
• D) examining differences in expected total future revenues and expected total future costs among alternatives

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Definitions:

Floating Rate

An interest rate that fluctuates over time with the market or an underlying benchmark.

Exotic

Often refers to a type of financial instrument or investment that is complex and not traditional, involving unique characteristics or structures.

Fisher Effect

The relationship between nominal returns, real returns, and inflation.

Nominal Rates

Interest rates or rates of return that have not been adjusted for inflation, representing the face value of financial products.