When Are Costs Relevant to a Particular Decision

question 155

Multiple Choice

When are costs relevant to a particular decision?

• A)If they are fixed costs
• B)If they differ across the alternatives being considered
• C)If they are variable costs
• D)If they remain unchanged across the alternatives being considered

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Definitions:

Relevant Range

The level of activity within which assumptions about variable and fixed cost behaviors are valid.

Total Expense Per Unit

is the computation of all costs involved in producing one unit of a product, including both variable and fixed expenses.

Level Of Activity

This refers to the volume of production or the quantity of services provided by a business over a period of time.

Expected Costs

These are forecasted or estimated costs for a product, project, or operation based on historical data and future projections.