Question

What are the relevant costs in this decision?

You have to decide between renting apartment C at a cost of $400 or an apartment D at a cost of $550. Because apartment D is larger the utility bill will be $125 per month rather than the $50 for apartment C. You need a parking space. It is included in the rent for Apartment C. If you rent apartment D, you will have to pay an additional $50 for parking. Your food bill is $250 and your cell phone costs you $100.

Answer 1

Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process.

So Relevent costs for decision making is:

Rent of apartment

utility bill and

parking bill

Food bill and cell phone cost are irrelevant cost. As same will not affect the decision of choosing any of the alternative.