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Future costs are relevant in decision making if the decision will affect their amounts.
For example, suppose you're trying to decide whether to drive to work or take the bus. Relevant future costs information includes (1) the cost of gasoline and tolls needed to drive to and from work and (2) the cost of bus fare because both of these costs depend on your decision. However, future costs that won't change - such next month's rent on your apartment - are not relevant because, regardless of your decision, they will not change.
Note that past costs are never relevant in decision making.
What else can I help you with?
All future costs are relevant in decision making?
Future costs are relevant in decision making if the decision will affect their amounts. For example, suppose you're trying to decide whether to drive to work or take the bus. Relevant future costs information includes (1) the cost of gasoline and tolls needed to drive to and from work and (2) the cost of bus fare because both of these costs depend on your decision. However, future costs that won't change - such next month's rent on your apartment - are not relevant because, regardless of your decision, they will not change. Note that past costs are never relevant in decision making.
What is the difference between relevant cost and irrelevant cost?
Relevant cost is that cost which is required for the specific decision making process or the cost which will be change due to specific decision while irrelevant cost has no concern with decision making or any specific decision.
What is the distinction between relevant cost and irrelevant cost?
Relevant cost is that cost which is necessary for the underlying decision in decision making process while irrelevant cost is not necessary to be decision to be made.
Are sunk costs ever relevant for decision-making purposes?
NO, its cost which was wasted in past we can not recover it so it is not relevant for decision making.
The book value of old equipment is not a relevant cost in a decision?
That's correct. The book value of old equipment represents its historical cost and accumulated depreciation, which is not relevant for decision-making because it does not reflect the current market value or the future costs and benefits associated with the equipment. When making decisions, it's important to focus on relevant future costs and benefits rather than past historical costs.
Is variable cost a relevant cost?
No. If a variable cost does not differ between alternatives than it is irrelevant.
What role do past cost play in relevant costing decision?
Past costs can play an important role in making future cost budgets. The previous costs can help individuals budget how much money they will need for future production of similar objects.
When is fixed cost relevant in decision making?
When there will be change in fixed cost of business then at that time fixed cost will be relevant cost For Example if acquiring new machinery will reduce the amount of fixed expense in that case fixed cost is also relevant.
What are the differences between relevant cost and irrelevant cost?
In decision making process those cost which are effected from the decision under consideration those costs are called relevent costs and those costs which have no impact on decision making of specific project are called irrelevent costs.
Why a cost accumulation system is required for generating relevant cost information for decision making?
cost accumulation is the collecting and gathering of all cost and become collected
When fixed cost treated as relevant cost?
Fixed cost become relevent cost when a particular decision affects the fixed cost of production. For Example: Before Decision fixed cost $100 After Decision Fixed Cost $120 so in this case fixed cost also becomes relevent for decision making.
A cost is considered relevant if it is avoidable and future and cash?
A cost is considered relevant if:
