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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.
Is variable cost a relevant cost?
No. If a variable cost does not differ between alternatives than it is irrelevant.
Is direct labor cost a relevant cost?
If direct labor cost creates impact or influences the decision then it is relevant cost but if direct labor is not creating influence or changing in decision then it is irrelevant cost for example direct labor cost remain same irrespective of whatever the decision then direct labor cost is also irrelevant.
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 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.
Are fixed costs always irrelevant?
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.
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.
A cost is considered relevant if it is avoidable and future and cash?
A cost is considered relevant if:
Is opportunity cost a relevant cost?
Yes, opportunity cost is a relevant cost because it can be used in something more productive.
What is the noun form of the adjective relevant?
The abstract noun form of the adjective 'relevant' is relevance.
What are the advantages of relevant cost?
1.Relevant cost helps provide a consistent basis for the comparison of alternative proposal. 2.Relevant cost deal with the quantitative aspects of decisions.
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.
