Irrelevant Cost
Accounting glossary · Understand, connect, apply
An irrelevant cost does not change the comparison between specified alternatives. It may be a past cost or a future amount that will be incurred equally under each option.
Example
A business must pay its existing 1,500 monthly office rent whether it accepts or rejects a small spare-capacity order. That unchanged payment does not distinguish the two choices.
Remember the difference
Irrelevant to a decision does not mean unimportant to the business. The cost may still need budgeting, recording, payment and disclosure. Reassess it when the alternatives or time horizon change.
Browse the accounting glossary → · Follow a learning path
Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary