relevant cost

Relevant costs are items on which future costs and revenues are expected to differ relative to the alternative decisions under consideration

Relevant cost is a future cost that differs between alternatives and therefore affects decision-making; sunk costs are not relevant.

- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.

- Example: The costing team uses **relevant cost** to allocate costs and analyze margins by product line.

- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.