2: Relevant & Strategic Cost Analysis - OpenCostAccounting.org

à 16 avril

The following costs are relevant to the decision situation cited except: AACSB: Reflective ThinkingAICPA BB: IndustryAICPA FN: Decision MakingBloom's: NDifficulty: MediumLearning Objective: 14-03 List and 15. Which of the following costs can be ignored when making a decision?Definition: Relevant cost, also called differential cost, is a management accounting term decsribing costs that pertain to a particular decision. Relevant costs will vary based on the context of the decision, such as an omnichannel business analysis by a multi-platform retailer.A relevant cost is a future cash flow that will occur as a direct consequence of making a particular decision. They cannot include any cost occurred in past. Notional costs such as depreciation, interest costs and absorbed fixed cost are not relevant cost.And I took the relevant cost, I never ask for high price. 16. Tell me how you would go about increasing my rankings for my website? Which of the required job skills do you feel you are strongest at? I have carefully read your job description; I am having expertise at all of your required qualities.Sunk Cost Sunk cost is expenditure which has already been incurred in the past. Sunk cost is irrelevant because it does not affect the future cash flows of a business. Opportunity Costs Cash inflow that will be sacrificed as a result of a particular management decision is a relevant cost.

What is relevant cost? Measure business decisions to… | BigCommerce

Relevant Cost - Definition and Explanation with Example: "The term relevant cost is used to describe not only changes in cost but also changes in revenue". "Costs and benefits which are independent of the decision are obviously irrelevant costs and are not considered in making decision".Relevant cost of materials is the incremental future cost of utilizing materials in a proposed business decision. The past cost that has already been This is because the consumption of the current stock of materials, in for example, a new project will necessitate the purchase of more stock at the current...Cost Concepts for Decision Making. A relevant cost is a cost that differs between alternatives. She is trying to decide which alternative is less expensive and has gathered the following information Identifying Relevant Costs From a financial standpoint, Cynthia would be better off taking the train to...The following cost estimate has already been prepared 6. This is an apportionment of the general administration overheads incurred by HL Co. Required: Prepare, on a relevant cost basis, the lowest cost estimate which could be used as the basis for the quotation.

Relevant costing and Decision Making Techniques | Mindmaplab

Explanation: In simple words, relevant cost refers to the cost that depicts the difference between the alternatives being considered. A cost must be made in future, should have a cash flow and has to be incremental to be considered as a relevant cost....Best Describes An Opportunity Cost:a. It Is A Relevant Cost In Decision Making, But Is Not Part Of The Traditional Accounting Records.b. It Is Not A following best describes an opportunity cost: a. it is a relevant cost in decision making, but is not part of the traditional accounting records. b. it is not a...Relevant cost is a future cost. The loss of profits will happen in future if production is stopped. Relevant costs consists of actual cash flows. Company receives cash by selling its product and if production is halted this cash flow will also stop. Relevant costs are dependent on the decision.The relevant cash flows are future, incremental cash flows arising from the decision being made. This means that the cash flows are only relevant if Answer: Microscope cost is CU18,000 is sunk costs as purchased 3 years back. Current disposal value of CU is Opportunity cost - revenue foregone...Replacement cost is relevant because it is the cost to replace an existing unit of inventory with a similar one, which is a normal cost in a business's now and lower back the suitable judgements are those we don't think of roughly too perplexing on. additionally, i think this is a mixture of the two the...

Definition: Relevant cost, also called differential cost, is a management accounting term decsribing costs that pertain to a particular decision. Relevant costs will vary based on the context of the decision, such as an omnichannel business analysis by a multi-platform retailer.

What types of relevant costs are there?

Relevant costs are generally divided into two categories

Future Cost - Incurred in the future based on the potential decision made. This should vary from decision option to decision option. If this does not change based on the decision, then it is an irrelevant cost (see below).Opportunity Cost - The cost in lost opportunity depending on the decision made.Are there irrelevant costs?

Yes, irrelevant costs are those that should not be considered when making a decision because they can not be changed:

Sunk Cost - Costs that have already been paid are considered irrelevant. CommittedCost - A future cost that is considered irrelevant. If the future cost must be paid regardless of the decision made then it is irrelevant.What are relevant costs that online merchants should think about?

Executive management at a company decides that they want to develop a mobile application for Android-based mobile devices. They are presented with two options by the technical team: A web application wrapped to look like a mobile application or a mobile application written for Android. Each decision has several relevant costs:

Development Time(Future cost) - How much time will it take to develop each option?Developer Resources(Future cost) - How many people, and at what wage, are required to build each option?Time to Market(Opportunity cost) - How much will a difference in delivery time impact sales, and what is the difference?Perceived Performance (Opportunity cost) - Is one option better performing than the other, and what is the expected abandonment rate based on that performance difference?Omnichannel Marketing (Future & Opportunity cost) - Can one option fit the overall brand experience better than the other, and is there a cost associated with integrating the application into the brand?

There are also irrelevant costs that should be ignored:

Existing Website(Sunk cost) - The cost of the current website, even if it were reused for the application, is irrelevant. Any cost mitigation it provides would be accounted for in development time and resources.Testing Software(Committed cost) - Regardless of the option chosen, the same testing software will be used.The cost of the iOS Application(Sunk cost) - Like the existing website, the cost of the iOS application is irrelevant to this decision.