}Relevant cost terminology

ØDifferential costs – differences in total costs or revenues between two alternatives.

ØOpportunity cost 

ØAvoidable costs – specific costs associated with an activity that would be avoided if that activity did not exist.

}Non-relevant cost terminology

ØSunk costs are past or historical costs which are not directly relevant in decision making, for example, developmentcosts or market research costs.

ØCommitted costs are future costs thatcannot be avoided, whatever decision is taken.

ØNon-cash flow costs

ØGeneral fixed overheads

ØCarry amount of non-current assets