Which one of the following is a relevant cost?
Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process.
Which of the following costs is never relevant to managerial decisions?
Sunk costs are those costs that happened and there is not one thing we can do about it. These costs are never relevant in our decision making process because they already happened.
What will never be a relevant cost?
1. Sunk costs (past costs) or committed costs are not relevant. Sunk, or past, costs are monies already spent or money that is already contracted to be spent. A decision on whether or not a new endeavour is started will have no effect on this cash flow, so sunk costs cannot be relevant.
What is relevant and non relevant?
Relevant costs refer to those that will differ between different alternatives. Irrelevant costs are those that will not cause any difference when choosing one alternative over another.
What are examples of relevant cost?
Examples of relevant costs Management is weighing the cost of manufacturing the bed frames compared to outsourcing the materials and labor to a foreign company. After evaluating the relevant costs, producing the bed in-house would cost more money. To save money, they outsourced the production of the bed frames.
Which of the following is relevant cost?
The correct answer is c: replacement cost.
What is the meaning of relevant costs?
Relevant costs’ can be defined as any cost relevant to a decision. A matter is relevant if there is a change in cash flow that is caused by the decision. The change in cash flow can be: additional amounts that must be paid.
What are relevant and irrelevant costs?
Relevant costs are costs that will be affected by a managerial decision. Irrelevant costs are those that will not change in the future when you make one decision versus another. Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided.
What 2 types of costs are never relevant to a decision?
Two broad categories of costs are never relevant in decisions: 1. Sunk costs. 2. Future costs that do not differ between alternatives.
What are the relevant costs in the managerial decision making process?
What Is Relevant Cost? Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process.
What types of costs are involved in management decision?
2. Relevant Cost: Relevant costs are those future cost which differ between alternatives. Relevant costs may also be defined as the costs which are affected and changed by a decision.
What costs are relevant to decision making?
Differential, avoidable, and opportunity costs are considered relevant costs. Sunk and fixed overhead costs are irrelevant. Using examples to demonstrate these costs show us that which costs are included in what places depend on what decision is made and the specific situation.
What will always be a relevant cost?
d. only variable costs are relevant. all costs are relevant if they change between alternatives
What are examples of relevant costs?
Assume, for example, a chain of retail sporting goods stores is considering closing a group of stores catering to the outdoor sports market. The relevant costs are the costs that can be eliminated due to the closure, as well as the revenue lost when the stores are closed.
Which costs are always irrelevant in decision making?
Sunk costs are those costs that happened and there is not one thing we can do about it. These costs are never relevant in our decision making process because they already happened. These costs are never a differential cost, meaning, they are always irrelevant.
What does non relevant mean?
Definition of nonrelevant : not bearing on the matter being considered : irrelevant nonrelevant information.
What is the difference between relevant and irrelevant data?
Let me be more specific: critical data is information that you know you need now, relevant data is information that you will probably require next week or next month but not right now, and irrelevant data is information that you have to keep (usually for compliance purposes) but hope never to have to access again.
Do you say irrelevant or not relevant?
: not important or relating to what is being discussed right now : not relevant His comment is completely irrelevant.
Does relevant mean important?
When something is relevant, it matters. Its relevance is clear. Relevance is simply the noun form of the adjective relevant, which means important to the matter at hand. Artists and politicians are always worried about their relevance. If they are no longer relevant, they may not keep their job.
What is meant by relevant and irrelevant cost with examples?
Relevant costs are costs that will be affected by a managerial decision. Irrelevant costs are those that will not change in the future when you make one decision versus another. Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided.
What are always relevant costs?
Relevant costs are those costs that differ among the alternative courses of action. In some situations (such as make or buy) most variable costs would be considered relevant.
Is advertising cost a relevant cost?
The advertising is an avoidable cost. If the product line is dropped, those ads won’t be needed any longer.
What is another term for relevant costs?
Definition: Relevant cost, also called differential cost, is a management accounting term decsribing costs that pertain to a particular decision.
How do you find the relevant cost?
Assume, for example, a chain of retail sporting goods stores is considering closing a group of stores catering to the outdoor sports market. The relevant costs are the costs that can be eliminated due to the closure, as well as the revenue lost when the stores are closed.
What is a relevant cost quizlet?
The current purchase price of $22 will be used to determine the relevant cost of Material C as this will be the value of each unit purchased. The original purchase price of $20 is a sunk cost and so is not relevant. Therefore the relevant cost of Material C for the new product is (120 units x $22) $2,640.
