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Relevant & Irrelevant Costs for Decision-Making

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

If you have three choices and with each choice these costs are different, what type of costs are they?

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1. Which of the following costs is NOT a relevant cost?

2. If you would make $1 million with decision A and $2 million with decision B, what are your opportunity costs for choosing A?

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About This Quiz & Worksheet

There is more to profitability than just income and spending, and understanding how some different costs can affect decisions you make regarding your business. This quiz/worksheet will test your knowledge of some of these costs, including how to calculate the opportunity cost with a new venture.

Quiz & Worksheet Goals

This quiz and worksheet cover the following:

  • The type of cost that offers choices with different costs
  • Identifying relevant costs
  • Calculating opportunity costs
  • Differentiating between different types of costs
  • Finding what type of cost is represented in a given problem

Skills Practiced

These assessments require the following skills:

  • Information recall - access the knowledge you've gained regarding costs involved in making decisions for a business
  • Problem solving - use acquired knowledge to solve an opportunity cost practice problem
  • Reading comprehension - ensure that you draw the most important information about relevant costs from the related lesson on decision-making costs

Additional Learning

Further your knowledge of costs in business by reviewing the lesson titled Relevant & Irrelevant Costs for Decision-Making. In this lesson, you'll learn the following:

  • The differences between several types of costs
  • How opportunity costs are affected by irrelevant and relevant costs
  • What sunk and fixed overhead costs are
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