Relevant vs. Irrelevant Costs: Key Differences Every Manager Should Know
Relevant costs change with a decision; irrelevant costs stay the same no matter what you choose. Managers often lump all past expenses into “cost of doing business,” but yesterday’s price tag can’t guide tomorrow’s choice—only future, decision-specific dollars matter. Key Differences Relevant costs are incremental and avoidable; irrelevant costs are sunk or fixed. One drives…