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Management accountants are frequently asked to analyze various decision situations including the following: The cost of a special device that is necessary if a special

Management accountants are frequently asked to analyze various decision situations including the following:

  1. The cost of a special device that is necessary if a special order is accepted.
  2. The cost proposed annually for the plant service for the grounds at corporate headquarters.
  3. Joint production costs incurred, to be considered in a sell-or-process-further decision.
  4. The costs associated with alternative uses of plant space, to be considered in a make/buy decision.
  5. The cost of obsolete inventory acquired several years ago, to be considered in a keep-versus-disposal decision.

The costs described in situations III and V above are examples of:

A. Opportunity costs.

B. Sunk costs.

C. Relevant costs.

D. Prime costs.

E. Discretionary costs.

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