Irrelevant cost

This refers to a business cost that does not does not influence a business decision.

Irrelevant costs do not change, irrespective of the decision taken; for example discontinuing a single, little-bought, product within a large product range would not affect the cost of the senior management team or the rental cost of the building – unless any of these were only used to produce or sell the product. Irrelevant cost is a term normally found in management accounting, and financial management. Explore our learning zone to discover more