CIMA BA2 · Chapter 11 · Question 1 of 12
In short-term decision making, which costs are RELEVANT?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Future cash flows that will change as a direct result of the decision
Explanation
Relevant costs are future, incremental cash flows arising as a result of the decision. Sunk costs, committed costs, non-cash items such as depreciation, and apportioned fixed overheads that do not change are not relevant.
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