20.2.5. Based on Relevance for Decision-Making

Try these first

1. 1.

   What are relevant costs?

   Hint

   Think about costs that affect your choices moving forward.

2. 2.

   True or False: Sunk costs are applicable to future decisions.

   Hint

   Remember, these costs are already spent.

3. 3.

   What are relevant costs?

   Hint

   Focus on costs that change with your decisions.

4. 4.

   True or False: Irrelevant costs can affect decision outcomes.

   • True
   • False

   Hint

   Think about costs that can be ignored in future planning.

5. 5.

   A startup has already spent $10,000 on a failed marketing campaign. They are considering launching a new campaign that would cost an additional$15,000. Should they take the sunk cost into account when making their decision?

   Hint

   Review what sunk costs mean and their influence on future decisions.

6. 6.

   A company has a choice between two suppliers that offer different pricing. Supplier A has a recurring annual fee of $5,000 while Supplier B has an initial setup cost of$8,000 but a recurring fee of only $3,000. Calculate which supplier has a relevant cost advantage over three years.

   Hint

   Consider all costs that will repeat or change over time as relevant costs.