Fixed costs will usually be irrelevant for short-term decision-making because they: Generally do not vary between decision options being considered.
Irrelevant costs are fees that are independent of the mixed decisions or alternatives. They are not considered in constructing a decision. Irrelevant costs may be organized into two varieties viz. sunk costs and expenses that are the same for further alternatives.
The availability of fixed cost data frequently promotes business decisions that decline operating leverage due to overproduction and inventory accumulating. The purchase price, decrease in variable costs, additional revenue, and opportunity costs are appropriate in short-term decision-making.
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