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Relevant costs and benefits for operating decisions:
In operating decisions, concentration is on best use of existing capacity. Incremental analysis based on differential cost and differential revenue is based directly on the concept of relevant cost and benefit. The term opportunity cost also springs from the thought underlying this concept.
Relevance of normal and abnormal cost:
The terms normal cost and abnormal cost, normal working conditions and abnormal cost cannot be treated alike. Similarly, cost accounting strategy for normal conditions will not hold good for abnormal conditions. The term normal stands for anything (cost of circumstances) which is in agreement with what is in agreement with what is representative, usual or regular. The term abnormal stands for anything (cost or circumstances) which is in agreement which is different from what is normal, ordinary or expected. Different cost accounting treatments are laid down for normal cost and abnormal cost.
given a scenario when iddle capacity is less than the special order.in this case should we accept or reject the order
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Least-cost-selection
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Explain what is meant by traditional costing system. Support with example.
Direct materials,4yard at$3.50per yard...$14.00 Direct labor,1.5direct labor hours at $12.00 per direct labor hour....$18 Variableoverhead,1.5 direct labour hours at $2.00 per dire
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Two types of costs concerned in factoring are as: 1) The service fee or factoring commission 2) The interest on advances granted through the factor to the firm. Factoring
VALUE CHAIN ANALYSIS Every firm is a collection of activities that are executed to design, generate, market, deliver and support its products or services. Value chain analysis
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