Final answer:
The key to business decision-making is focusing on relevant costs and using differential analysis, as this considers future costs that may differ under various decision options and ignores sunk costs, which should not influence the decision-making process.
Step-by-step explanation:
The correct option for the question which of the following is one of the keys to business decision making is b. Focus on relevant costs and use differential analysis. In profitable business decision-making, it is imperative to focus on costs that are relevant to the decision at hand. Relevant costs are future costs that will differ under various alternatives. This approach excludes sunk costs, which are costs that have already been incurred and cannot be recovered. Sunk costs should not influence the decision-making process.
Variable costs are significant because they are within the company's control and can change with the level of production or service provision. On the other hand, differential analysis, also known as incremental or marginal analysis, helps in comparing the differential revenues and costs of different decision alternatives to select the best possible option. Moreover, it is also crucial to consider both quantitative and qualitative data and to evaluate the impact of decisions on future cash flows.
While making business decisions, it is not advisable to focus solely on qualitative data, historic costs, or costs that do not change under different alternatives, as they provide limited insight into the future implications of a decision.