Select either true or false for the following statements. 1. Relevant costs are also known as unavoidable costs 2. Incremental costs are also known as differential costs 3. An out-of-pocket cost requires a current and/or future outlay of cash. 4. An opportunity cost is the potential benefit that is lost by taking a specific action when two or more alternative choices are available 5. A sunk cost will change with a future course of action.

1. Relevant costs are also known as unavoidable costs - False.

Relevant costs are in fact, avoidable cost that only emerge in specific business decisions.

2. Incremental costs are also known as differential costs - False

Incremental costs are costs that are incurred when an additional unit of output is produced. Differential costs ocurr when a particular product is made instead of another.

3. An out-of-pocket cost requires a current and/or future outlay of cash. - True

An out-of-pocket cost or expense is a direct payment of money, in other words, an outlay of cash.

4. An opportunity cost is the potential benefit that is lost by taking a specific action when two or more alternative choices are available - True

An opportunity cost can also be defined as what is given up to obtain something.

5. A sunk cost will change with a future course of action. - False

Sunk costs are costs incurred in the past, that cannot be recovered, or modified.