Which of the following is a characteristic of relevant costs?

The defining characteristic of relevant costs is that they differ between alternatives in a decision-making context. When evaluating different options, only the costs that will change as a result of the decision at hand are considered relevant. These costs are typically future costs that will be incurred or savings that can be realized depending on the alternatives chosen.

For instance, if a company is deciding whether to continue producing a product or to discontinue it, the relevant costs would include any future costs that would vary with the decision—such as production costs or lost revenue—while ignoring sunk costs or fixed costs that will not change regardless of the company's decision.

Understanding this distinction helps decision-makers focus on the costs that will impact their future choices, allowing for more informed and financially sound decisions. It emphasizes that the evaluation is based on fresh data related to potential future outcomes rather than irrelevant past costs or fixed expenses that remain constant.