Question

"Variable costs are always relevant, and fixed costs are always irrelevant". Do you agree? Why?

Answer 1

Before reaching at any conclusion firstly we need to understand what is relevent cost, so the relevant cost is a cost which  can change the decision of a user or management, relevent cost change with the change in decision of Management.

Therefore now we can conclude that since fixed cost also play a very vital role in costing or in decision making and it is one of the major expense in any organisation which can influence/change the decision of the management. Therefore fixed cost are not always irrelevant.

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