What information does relevant costing consider?

Relevant costing focuses on the future costs that will be influenced by a specific decision. This approach is critical in managerial accounting as it helps managers make informed decisions based on potential future financial outcomes rather than past expenses. When evaluating a decision, only costs that will change as a result of that decision are considered relevant; hence, future costs that can be avoided or incurred directly associated with alternative options are essential for analysis. This approach allows businesses to effectively assess the impact of different choices, increase efficiency, and optimize resource allocation by concentrating on economically pertinent information.