Isolating relevant costs is desirable because:

• A. it allows for the inclusion of all historical costs in the analysis
• B. it ensures that sunk costs are always considered in future decisions
• C. it helps decision-makers focus on costs that will be affected by their choices
• D. it guarantees that normative judgments are removed from the analysis

Answer: (C)

Verified step by step guidance

1. Understand the concept of relevant costs: these are costs that will be directly affected by a decision and therefore should be considered when making that decision.
2. Recognize that historical costs, also known as sunk costs, are costs that have already been incurred and cannot be changed by any current or future decision.
3. Note that including sunk costs in decision-making can lead to incorrect conclusions because these costs do not vary with the decision at hand.
4. Isolating relevant costs means focusing only on those costs that will change as a result of the decision, which helps decision-makers evaluate options more effectively.
5. Therefore, the key reason for isolating relevant costs is to help decision-makers focus on costs that will be affected by their choices, improving the quality of economic decisions.