Required information We will discuss cost classifications used in making decisions: differential costs, sunk costs...
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Required information We will discuss cost classifications used in making decisions: differential costs, sunk costs and opportunity costs. For purposes of making decisions, the concepts of differential cost and revenue, sunk cost, and opportunity cost are vitally important. Differential costs and revenues are the future costs and revenues that differ between alternatives. Sunk cost is a cost that occurred in the past and cannot be altered. Opportunity cost is the benefit forgone when one alternative is selected over another. Differential costs and opportunity costs are always relevant and should be carefully considered in decisions. Sunk costs are always irrelevant in decisions and should be ignored. Opportunit Cost Opportunity Cost Investment Income 
Required information
We will discuss cost classifications used in making decisions: differential costs, sunk costs and opportunity costs. For
purposes of making decisions, the concepts of differential cost and revenue, sunk cost, and opportunity cost are vitally
important. Differential costs and revenues are the future costs and revenues that differ between alternatives. Sunk cost is
a cost that occurred in the past and cannot be altered. Opportunity cost is the benefit forgone when one alternative is
selected over another. Differential costs and opportunity costs are always relevant and should be carefully considered in
decisions. Sunk costs are always irrelevant in decisions and should be ignored.
Opportunit Cost
Opportunity Cost Investment Income
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