REPLY WITH AT LEAST 150 WORDS, CITATION AND REFRENCE Irrelevant cost is a decision that would not be affected by a managerial decision (Kenton, 2020). One situation that comes to mind is when I was w

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REPLY WITH AT LEAST 150 WORDS, CITATION AND REFRENCE

Irrelevant cost is a decision that would not be affected by a managerial decision (Kenton, 2020).  One situation that comes to mind is when I was working for my previous employer they would always worry about how much money was spent on the previous month for business essentials such as rent and utilities.  These items are something that are needed in order to keep the business running so I was appalled when they were looking for ways to cut cost on these items instead of looking at other areas of the company to cut non essential costs.  They would look at the numbers, worry about the money spent and try to cut costs on business essentials.  These worrisome thoughts about items that have no relevance to anything anymore should be left in the past because that money cannot be taken back anymore and has already been spent which is a sunk cost (Froeb, McCann, Shor & Ward, 2016).  At the end of the day they decided that cutting costs on business essentials and worrying about money that was already spent was not worth the hassle.  One thing that could have been done differently is looking at other areas of the business where they might be able to save on.

References

Froeb, L. M., McCann, B. T., Shor, M., Ward, M. R. (2016). Managerial economics: A problem-solving approach (4thed.). Boston, MA: Cengage Learning

Kenton, W. (2020). Irrelevant cost. Retrieved from https://www.investopedia.com/terms/i/irrelevantcost.asp

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