Definition of relevant costs

Expected future costs that differ among alternative courses of actions. In product deletion or outsourcing decisions, the relevant costs are typically those that are avoidable if the product or service is either outsourced or eliminated from an entity’s offerings.

Example

Sunk costs are typically considered not to be relevant because irrespective of the choice of the future action, those costs have already been incurred and therefore will be the same across the decision alternatives.[1]

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