Select the correct statement regarding relevant costs and revenues.

a) To be relevant, a cost or revenue must be future-oriented and must differ between the alternatives.

b) Sunk costs are relevant for decision-making purposes.

c) Differential revenues are expected future revenues that do not vary between the alternatives under consideration.

d) Avoidable costs are also known as sunk costs.

Question

Business

Elaina Riley

31 August, 10:37

Select the correct statement regarding relevant costs and revenues.

a) To be relevant, a cost or revenue must be future-oriented and must differ between the alternatives.

b) Sunk costs are relevant for decision-making purposes.

c) Differential revenues are expected future revenues that do not vary between the alternatives under consideration.

d) Avoidable costs are also known as sunk costs.

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Answers (1)

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Kamari Ruiz · Answer 1

d) Avoidable costs are also known as sunk costs.

Explanation:

The avoidable cost are those cost that can be ignored while making decision. The sunk costs are all those cost which already been incurred and it will not be effected by the change in decision. The sunk costs are already been expensed so, whatever decision you make it will not be changed.