Is A Cost That Has Already Been Incurred? Sunk costs are those which have already been incurred and which are unrecoverable. In business, sunk costs are typically not included in consideration when making future decisions, as they are seen as irrelevant to current and future budgetary concerns. What can be defined as costs that have
Is Labour Cost A Relevant Cost? The costs incurred last year (material, labour, and overheads) are not relevant to the decision. They are examples of past (sunk) costs. The original costs are not avoidable and are common to all alternatives. What costs are considered relevant? ‘Relevant costs’ can be defined as any cost relevant to
How Do You Find The Relevant Range? With variable costs then, the relevant range will be the range where the cost of adding one more, will be the same as the last. In this example, from 0-100 widgets, each additional widget will add $1 in cost to our direct materials. Once we go above 100,