Relevant costs for non-routine decisions, Managerial Accounting

Assignment Help:

RELEVANT COSTS FOR NON-ROUTINE DECISIONS

A relevant cost is a cost that is appropriate to a specific management decision. To be relevant, a cost should be:

1) Future cost – A decision is usually about the future & management not what has already been done. A cost that has already been incurred is therefore irrelevant to any decision being made now e.g. costs already paid or costs committed by decisions made in the past.

2) Relevant costs are cash flows–It is assumed that decisions are taken which would maximize the satisfaction of the company owners & therefore such decisions must not be ignored. Such costs include depreciation, notional rent or notional interest or absorbed O/H.

3) Relevant costs arise as a direct consequence of making a decision. It must be an incremental cost i.e. the difference between the cost with the decision & the cost without the decision.


Related Discussions:- Relevant costs for non-routine decisions

Management, Discuss the different roles played by the qualitative and quant...

Discuss the different roles played by the qualitative and quantitative approaches to managerial decision making

How the tax credit will affect price and quantity , 1. In order to boost th...

1. In order to boost the housing market throughout 2009 and into 2010, the federal government offered a tax credit to first-time home buyers and some repeat buyers.

Prepare an estimation of working capital, Prepare an estimation of working ...

Prepare an estimation of working capital needs from the subsequent information of a trading relates with: (a) Projected Annual Sales 1,00,000

Time series analysis, what is semi average trend analysis using regression ...

what is semi average trend analysis using regression analysis method?

Management accounting influence, Management Accounting Influence (A) ...

Management Accounting Influence (A) Transfer pricing and performance measurement relies upon the judgment of the management accountant to make a suitable choice of approach

Explain about intra company transfer pricing, Intra company transfer pricin...

Intra company transfer pricing A company engaged in production may have several segments division or departments doing production jobs or manufacturing party or fully finished

Case study, FOR each of the following cases, indicate why management and th...

FOR each of the following cases, indicate why management and the auditors determined that control deficiency was a material weakness. Case1. In our assessment of the effectiveness

Determine the cost according to normality, Determine the cost according to ...

Determine the cost according to normality According to normality: under this category cost may be categorized as follows: Normal cost: it is the cost which is normally i

Explain budgetary control according to CIMA, Budgetary control Accordin...

Budgetary control According to CIMA the establishment of budgets relating the responsibilities of executive to the requirement of a policy and the continuous comparison of achi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd