Asked by richard chiem on Jun 12, 2024
Verified
Which of the following statements in relation to making tactical decisions is incorrect?
A) Future costs are always relevant.
B) Sunk costs are always irrelevant.
C) Allocated and unitised fixed costs are generally irrelevant.
D) Opportunity cost is relevant when there is no excess capacity.
Tactical Decisions
Short-term decisions made within the framework of a company's strategic plans, often involving the allocation of resources or adjustment of operations.
Sunk Costs
Costs that have already been incurred and cannot be recovered or altered by future actions or decisions.
Opportunity Cost
Opportunity cost represents the benefit that is missed or given up when choosing one option over another, an important concept in decision-making.
- Discern the types of costs critical to decision making, like sunk costs, opportunity costs, and joint costs.
Verified Answer
AZ
Adnan ZafarJun 13, 2024
Final Answer :
A
Explanation :
Future costs are not always relevant; only incremental future costs that differ between alternatives are relevant for tactical decision-making. Sunk costs, allocated and unitized fixed costs are generally irrelevant, and opportunity costs are relevant when there is no excess capacity, making the other statements correct.
Learning Objectives
- Discern the types of costs critical to decision making, like sunk costs, opportunity costs, and joint costs.