Which term describes the cost that represents the additional costs and revenues resulting from a decision?

Which term describes the cost that represents the additional costs and revenues resulting from a decision?

• A. Relevant cost
• B. Committed cost
• C. Incremental cost
• D. Uncontrollable cost

Answer: (C)

Incremental cost captures the change in costs that happens when you choose one option over another, and it also includes the extra revenues that result from that decision. In practice, you compare alternatives by looking at what changes: the additional material, labor, and overhead you’d incur, plus any additional revenue the decision generates. The net incremental result tells you whether the decision adds value. Costs that don’t change with the decision aren’t included, and this concept sits alongside ideas like relevant costs (which differ between options) while contrasting with committed or uncontrollable costs, which aren’t influenced by the decision.

Incremental cost captures the change in costs that happens when you choose one option over another, and it also includes the extra revenues that result from that decision. In practice, you compare alternatives by looking at what changes: the additional material, labor, and overhead you’d incur, plus any additional revenue the decision generates. The net incremental result tells you whether the decision adds value. Costs that don’t change with the decision aren’t included, and this concept sits alongside ideas like relevant costs (which differ between options) while contrasting with committed or uncontrollable costs, which aren’t influenced by the decision.