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florida1014 florida1014
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List the two criteria to be considered relevant to decision making. Explain the difference between sunk cost and opportunity cost and indicate whether they can be considered relevant.
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Managerial Accounting

Managerial Accounting


Edition: 4th
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carolyne254carolyne254
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The two criteria that information must meet to be considered relevant are:
•It differs between alternatives, and
•The differences occur in the future
A sunk cost represents a cost that has been incurred in the past. Sunk costs are irrelevant.
An opportunity cost is the contribution margin of the next-best alternative. Opportunity cost can be relevant.
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