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Relevant costs are those costs which are pertinent to a decision. In other words, these are the costs which are influenced by a decision. Those costs which are not affected by the decision are not relevant costs.
Examples of relevant costs are:
(1) All variable costs are relevant costs.
(2) Fixed Costs which vary with the decision are relevant costs.
(3) Incremental costs are relevant costs.
(1) All variable costs are relevant costs.
(2) Fixed Costs which vary with the decision are relevant costs.
(3) Incremental costs are relevant costs.
Examples of non-relevant costs:
(1) All fixed costs are generally non-relevant.
(2) Variable costs which do not vary with the decision are not relevant costs.
(3) Book value of the asset is not relevant.
