Variable cost is relevant or irrelevant

Variable cost is relevant or irrelevant

Most of the time variable costs are relevant cost for decision making purposes but sometimes variable costs can be not relevant cost for decision making. For example a labour is paid on fixed based then the labour cost which is normally relevant cost becomes irrelevant cost because labour cost has become committed cost.

It is important to note that labour cost in above case is still variable because the labour is hired only there is some activity so labour cost overall is a variable cost but for decision making purpose it is treated as committed cost.