[amp_mcq option1=”Both (A) and (R) are correct” option2=”(A) is correct, but (R) is incorrect” option3=”(R) is correct, but (A) is incorrect” option4=”Both (A) and (R) are incorrect” correct=”option2″]<\/p>\n
The correct answer is: B. (A) is correct, but (R) is incorrect.<\/p>\n
Assertion (A) is correct because relevant costs are the costs that will change in the future as a result of a decision. Reason (R) is incorrect because not all variable costs are relevant costs, and not all fixed costs are irrelevant costs.<\/p>\n
For example, if a company is considering whether to produce a new product, the relevant costs would include the costs of materials, labor, and overhead that would be incurred if the product were produced. However, the costs of the company’s existing plant and equipment would not be relevant costs, because these costs would be incurred regardless of whether the new product is produced.<\/p>\n
Similarly, if a company is considering whether to close a plant, the relevant costs would include the costs of labor and materials that would be saved if the plant were closed. However, the costs of the plant’s depreciation would not be relevant costs, because these costs would be incurred regardless of whether the plant is closed.<\/p>\n
In conclusion, only the costs that will change in the future as a result of a decision should be considered when making that decision.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Both (A) and (R) are correct” option2=”(A) is correct, but (R) is incorrect” option3=”(R) is correct, but (A) is incorrect” option4=”Both (A) and (R) are incorrect” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-47942","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n