0
No fixed costs are not always irrelevant. Some fixed costs may differ among the alternatives and hence will be relevant. e.g. When figuring the incremental cost of the more expensive car, the relevant costs would be the purchase price of the new car (net of the resale value of the old car) and the increases in the fixed costs of insurance and automobile tax and license.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
Variable costs are relevant and fixed costs are irrelevant?
Generally variable costs are relevant costs but if due to any decision fixed costs are also going to affected then fixed costs are also relevant costs.
Variable costs are irrelevant whenever they do not differ among the alternatives at hand. do you agree?
Any cost whether variable cost or fixed cost is irrelevant if not different between alternatives at hand.
What is the importance of fixed costs versus variable costs in making a business profitable?
The importance of knowing which costs are fixed and which costs are very important in making a business profitable. In order to budget effectively, one needs to know costs that will always be the same (fixed) and the ones that sometimes change (variable).
What does fixed costs means?
what does fixed costs mean
Why are Fixed costs also called capacity costs?
Fixed costs are considered capacity costs because if a company expands, fixed costs will change. Additionally, if a company adds more resources, fixed costs will change.
Why depreciation on an existing asset is always irrelevant?
Depreciation is an invisible, non-cash cost and it is irrelevant when calculating the cash flow of the company which is the true indicator of whether the company is making a profit or not. Depreciation is also irrelevant because it is not truly realized until the asset is resold or scrapped at the end of its life. Recording it every year is consistent with the theory of conservatism when writing off costs. Depriciation is also irrelevant for the existing assets becoz it is fixed and fixed costs are always irrelevant unless they are incremental
Variable costs are relevant and fixed costs are irrelevant?
Generally variable costs are relevant costs but if due to any decision fixed costs are also going to affected then fixed costs are also relevant costs.
How does relevant evidence and material evidence differ?
Relevant means that the evidence provided goes toward establishing whether a person met one or more of the required elements of a crime. Irrelevant means it does no have anything to do with proving any of those elements. Often an attorney will try to get irrelevant evidence introduced for other factors, such as showing prior crimes, or getting th sympathy of the jury, which may or may not be applicable to what is being tried. * Differential/ marginal/variable/incremental costs are always relevant * Cash costs and future costs are always relevant * Past costs or sunk costs are always irrelevant * Fixed costs are always irrelevant unless they are incremental
Variable costs are irrelevant whenever they do not differ among the alternatives at hand. do you agree?
Any cost whether variable cost or fixed cost is irrelevant if not different between alternatives at hand.
What is the importance of fixed costs versus variable costs in making a business profitable?
The importance of knowing which costs are fixed and which costs are very important in making a business profitable. In order to budget effectively, one needs to know costs that will always be the same (fixed) and the ones that sometimes change (variable).
What does fixed costs means?
what does fixed costs mean
Why are Fixed costs also called capacity costs?
Fixed costs are considered capacity costs because if a company expands, fixed costs will change. Additionally, if a company adds more resources, fixed costs will change.
Why are historical costs irrelevant?
Historical costs are irrelevant because historical costs are sunk cost and no body can change any decision made in past so anything which can not be change due to underlying decision then that cost is irrelevant cost.
Is utilities a variable costs?
Technically speaking, it is a Fixed cost. Although the price may vary from month to month, it will always be within a fixed range.
Is fixed costs is a period costs?
Yes normally fixed costs are period costs because these costs have to be paid no matter production done or not.
What happens to sales when fixed costs decrease?
When fixed costs decrease, what does this do for sales?
What is the difference between escapable and unavoidable cost?
Avoidable or escapable costs are those costs which can be avoided by stop doing or start doing any particular activity and unavoidable costs are those costs which cannot be avoidable whether activity is done or not.For Example all variable costs are avoidable costs and fixed costs are unavoidable costs but this is general criteria to explain but not always all fixed costs are unavoidable.
