reply to classmate Relevant costs refer to avoidable expenses that are directly from specific business decisions (Tuovila, 2024). These costs are considered only when making choices because they impact the financial outcomes of various alternatives (Touvila, 2024). Relevant costs typically include variable, incremental, and opportunity costs, as the change depends on the action taken (Tuovila, 2024). The key function of identifying relevant costs is simplifying the decision-making process by excluding unnecessary data (Touvila, 2024). For instance, in deciding whether to sell or retain a business unit, management will focus on costs that are directly influenced by that decision while ignoring those that remain unchanged regardless of the outcome (Touvila, 2024). An example of this is the purchase of my air fryer. Once it is purchased, the cost of that purchase is irrelevant when calculating how much I save each time I choose to use it to fry wings instead of going to Buffalo Wild Wings. The purchase price was paid in the past, and I can't do anything to regain that cost (Datar, 2020). Irrelevant Costs Irrelevant costs are those that remain unaffected by a managerial decision (Kenton, 2021). Irrelevant costs typically include sunk costs, committed costs, or overhead expenses, as these costs cannot be avoided or altered in the short term (Kenton, 2021). For instance, the amount spent on the air fryer. According to Kenton (2021), examples of irrelevant costs are: Sunk costs: Expenses that have already been incurred and cannot be recovered Committed costs: Future costs that a business is obligated to pay and cannot change. Non-case expenses: These include depreciation and amortization, which represent the reduction in the value of assets over time but do not involve actual cash outflow. Overheads: General expenses related to running the business, such as administrative and operational costs, that are not directly tied to specific projects or decisions. Scenario Let's consider a scenario where a business is deciding whether to buy a new printer. The company currently has an old printer that works but is slow and frequently breaks down. The relevant costs would be the cost of the new printer, the maintenance costs of the old printer, and the efficiency gains from the new printer. The irrelevant costs would be the original cost of the old printer, the depreciation of the old printer, and the overhead costs that won't change regardless of which printer is decided on. In this scenario, the decision hinges on comparing future costs and benefits rather than focusing on past expenditures or unchanged overhead costs. The Opportunity-Cost Opportunity costs refer to the potential income or benefit that is sacrificed when choosing one alternative over another (Datar, 2020). It represents the value of the next best option, which is forgone (Datar, 2020). Datar (2020) gives this great example to better understand opportunity costs: When pursuing a bachelor's degree in accounting, the opportunity cost includes not just the direct expenses such as tuition, books, and living costs but also the income that could have been earned by working instead of attending school. The future benefits, like a higher salary from an accounting career, should outweigh both the out-of-pocket expenses and the opportunity cost. Opportunity costs are sometimes mistakenly treated as irrelevant, particularly when the focus is solely on direct costs without considering the broader financial implications of their choices. In the example about the printer above, the opportunity cost if the company decided not to buy a new printer, the opportunity cost is the potential benefits that could have been realized wit the new printer. For instance, the business may lose efficiency by keeping the older, slower, often broken-down printer. This might lead to delays in printing and wasteful employee time. Additionally, the company