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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:
- The cost of a special device that is necessary if a special order is accepted.
- The cost proposed annually for the plant service for the grounds at corporate headquarters.
- Joint production costs incurred, to be considered in a sell-or-process-further decision.
- The costs associated with alternative uses of plant space, to be considered in a make/buy decision.
- 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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