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Which THREE of the following are never relevant costs for short-term decision making?
Suggested Answer: A, C, E
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16 comments · newest first
CR
Cristen
10 months ago
Wait, are committed costs really irrelevant?
WI
Willard
10 months ago
I agree, sunk costs should never factor in.
CH
Cherri
11 months ago
Not sure about variable overhead costs being irrelevant...
LE
Leila
11 months ago
Incremental costs are super relevant for decisions!
NA
Nana
11 months ago
Depreciation costs are definitely irrelevant!
RO
Rozella
11 months ago
Committed costs sound familiar, but I’m not entirely sure if they’re always irrelevant. I need to double-check that.
CR
Crista
12 months ago
I practiced a similar question where incremental costs were definitely relevant, so I guess that rules them out here.
RE
Refugia
12 months ago
I remember that sunk costs should never be considered in decision making, but I can't recall if variable overhead costs are relevant or not.
GL
Glory
12 months ago
I think depreciation costs are definitely not relevant, but I'm a bit unsure about committed costs.
WE
Wenona
1 year ago
I'm not totally confident on this, but I think the key is to focus on the "short-term" part of the question. That means fixed costs like depreciation are probably not relevant. I'll give it my best shot.
TA
Talia
1 year ago
Okay, I've got this. Depreciation, incremental, and committed costs are all relevant for short-term decisions, so the three irrelevant ones must be A, C, and E. Time to mark my answer.
CO
Cordelia
1 year ago
Hmm, I'm a bit unsure about this one. I know sunk costs are irrelevant, but the other options have me scratching my head. I'll have to review my notes on cost concepts.
DE
Desmond
1 year ago
This looks like a classic cost accounting question. I'll need to think carefully about the differences between relevant and irrelevant costs for short-term decision making.
NA
Nan
1 year ago
Depreciation costs? Seriously? That's like trying to pay for a car you don't even own anymore. Short-term decisions should be all about the here and now.
WI
Willodean
1 year ago
Sunk costs? That's a no-brainer! I'm not paying for something that's already happened. It's like trying to un-spill milk, you know?
LA
Lanie
1 year ago
I think sunk costs are never relevant for short-term decision making.