ACCA PM · Chapter 8 · Question 1 of 10
Which of the following best defines a relevant cost for decision-making?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A future, incremental cash flow that arises as a direct result of the decision
Explanation
Relevant costs are future, cash-based and incremental: they change as a result of the decision being taken. Sunk costs, committed costs and apportioned fixed overheads that will be incurred anyway are not relevant.
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