Relevant cost
Relevant cost is a cost that is both future and different between the options being compared. It is the only kind of cost that should influence a decision; costs already incurred or unchanged across options are ignored.
Also known asrelevant costs
FrameworkRelevant costing
See it move
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A side-by-side comparison card evaluates a special order in two columns: Accept the order shows revenue of +€3,500 and labour and materials of −€2,800, leaving a net benefit of +€700; Decline the order shows zeros in every row. A note at the base states that €4,000 of timber already purchased appears in neither column because it is a sunk cost — already incurred, unchanged by the decision, and therefore irrelevant to the analysis.
Where it fits
SubjectCost AccountingCoreTopicRelevant Costs & Decision-MakingCore