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    Moving Downtown! Relevant and Irrelevant Costs

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    Evaluate the second partner's advice not to move downtown. Illustrate and fully explain using an example of relevant cost (a cost whose value does affect the optimal decision) and an example of irrelevant cost (a cost whose value does not affect the optimal decision) to the business regarding this decision.

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    Solution Preview

    A relevant cost is a cost that changes/differs with regard to a particular decision. In this case, the downtown rent will be higher than what these two partners are currently paying, making ...

    Solution Summary

    This solution provides a brief explanation of the difference of relevant and irrelevant costs, and provides examples of each in the context of a decision to relocate a company.