Relevant Cost for Decision Making Homework Help
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What is Relevant Cost?
It is a managerial accounting term. These are usually the costs that can be avoided while making new business decisions. The not so required data that takes some of the monetary facilities can be tried to regulate. Selling or keeping a business unit decision can work as a relevant cost example. In this article for Relevant cost for decision making homework help we discuss its many aspects.
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Types of Relevant Costs
In our Relevant cost for decision making homework help article, the following types of relevant cost are described
1. Differential cost: the cost difference or variance in between two distinctive projects and decision alternatives is called as differential costs. They are usually compared with differential revenues also.
2. Marginal/incremental cost: the sunk costs are ignored and the cost only in between alternatives are taken. Sunk costs are the one that can not be changed just like the marginal cost which is associated with the production of an additional unit. As our Relevant cost for decision making homework help say, incremental cost can be compared with incremental revenue for making decisions.
3. Opportunity cost: when the opportunity is lost in business, it is that cost. The company while going for the new projects should avoid to overlook any kind of opportunities for such projects. Rather, many alternative opportunities should be selected and hence one best should be chosen out of many.
4. Future cash flow: in our Relevant cost for decision making homework help article, we consider the cash expense incurring in the future as a product of decision is relevant cost.
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