Assumptions-relevant costs , Managerial Accounting

Assumptions for relevant costs

The key assumptions made in relevant costing are:

  • The cost behavior is recognized.
  • The amount of fixed costs, unit variable costs, selling prices and sales demand are known with certainty.
  • The objective of the decision maker in the short-term is to maximize satisfaction which can be defined as maximization of short-term profit.
  • The information on which the decision is based is complete and reliable.

 

There are various types of decisions that can be considered in this section, Illustrations comprise:


a. Make or Buy decisions
b. Shut down problems
c. Extra shift decisions
d. Joint cost decisions

Posted Date: 12/5/2012 7:42:17 AM | Location : United States







Related Discussions:- Assumptions-relevant costs , Assignment Help, Ask Question on Assumptions-relevant costs , Get Answer, Expert's Help, Assumptions-relevant costs Discussions

Write discussion on Assumptions-relevant costs
Your posts are moderated
Related Questions
Break even analysis and target profit, taxes - Patterson Parkas Company's sales revenue is $30 per unit, variable costs are $19.50 per unit, and fixed costs are $147,000. a)Compute

State performance budgeting according to carter performance According to carter performance budgets use statement of mission goals and objectives to explain why the money is be

Sean Corp. issued a $60,000, 10 year bond at the face rate of 8% annually on 1/1/X0. The market rate was 10%. How much cash will the bond investors receive at the end of the first

The Role of Computers in Simulation Computers can be used to: 1) To generate the random numbers 2) To simulate thousands of trials. This is done extremely fast, accuratel

Account analysis (Inspection of accounts) method: This method requires that departmental managers and the accountant inspect each item of expenditure within the accounts for s

Period of operating cycle implies that total sum of number of days included in the various stages of operation commencing from the purchase of raw materials and ending along with c

Disadvantages of Simulation 1) Although all models are simplification of reality, they may still be complex and require a substantial amount of managerial and technical time.

Question: (a) A retail store wants to evaluate how many units it must sell in order to earn a profit of Rs 10000 per month if the price of the unit is Rs 300, the average varia

What are the Principles of management accounting? 1. The procedures and methods to be followed for keeping and analyzing financial statements should have consistency. It enable

Number of Operating Cycles: The number of operating cycles in a period is determined by dividing the number of days in a year i.e.365 by the length of net operating cycle. Express