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

Two jobs during the period, The Work in Process account for Monty's Company...

The Work in Process account for Monty's Company contained the following entries: Work in Process Account Debit of $40,000 for direct raw materials Debit of $60,000 for direct labor

Finance, using the operating cycle and any other financial management knowl...

using the operating cycle and any other financial management knowledge,discuss the applicabilty of such cycle to poultry

Explain the terms - cost object and activities, Explain the terms - Cost ob...

Explain the terms - Cost object and Activities Cost object : it is an item for which cost measurement is required for example a product or a customer. Activities: these c

Illustrate the problem types of pricing, Pricing is a problem in four gener...

Pricing is a problem in four general types of situations: 1) When the firm develops or introduces a new product and it is fix the price of the product for the first time. 2)

Calculate transfer price - management control system, Calculate Transfer Pr...

Calculate Transfer Price - Management Control System? Question: Compute the Transfer Price for Product X and Y and the Standard Cost of Product Z as the intra company pricing r

Managerial accounting, I need help with a solution in the Cornerstones of F...

I need help with a solution in the Cornerstones of Financial and Managerial Accounting textbook, Chapter 11, problem 11-51B on page 578. I need to create a statement of cash flows

What is performance budgeting, What is performance budgeting The conce...

What is performance budgeting The concept of performance budgeting is used mainly in the government and public sector undertakings. It projects the government activities an

Cost management, Calculate the charges for single and double rooms assuming...

Calculate the charges for single and double rooms assuming that the authority wishes to make a RM10, 000 profits an accommodation

Transaction, Ask q1. On March 1, 2020, Tahir Muktar, a famous businessman i...

Ask q1. On March 1, 2020, Tahir Muktar, a famous businessman in Addis, opened a business named “Universal Garage” which is organized as a sole proprietorship. The business is estab

Markov properties, Markov Properties 1) Transition probabilities are de...

Markov Properties 1) Transition probabilities are dependent only on the current state of the system i.e. provided that the current state is recognized; the conditional probabil

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