- An expected future cost that varies with alternative courses of action. Decision making involves choosing between such alternatives and to make the best choice a manager needs to identify the future cash flows for each decision. Costs that have already been incurred as a result of past decisions (sunk costs) are not relevant for decision making. Likewise, a future cost that will not be changed by a decision is irrelevant to that decision. See differential analysisAn understanding of relevant costs is particularly important for the following types of decision:• special selling-price decisions;• product-mix decisions when capacity constraints exist;• decisions on replacement of equipment;• outsourcing (make or buy) decisions;• decisions on whether to drop a product or close a department.
Big dictionary of business and management. 2014.
Look at other dictionaries:
Relevant Cost — A managerial accounting term that is used to describe costs that are specific to management s decisions. The concept of relevant costs eliminates unnecessary data that could complicate the decision making process. Relevant costs are decision… … Investment dictionary
relevant cost — An expected future cost that varies with alternative courses of action. Decision making involves choosing between such alternatives and to make the best choice a manager needs to identify the future cash flows for each decision. Costs that have… … Accounting dictionary
relevant cost — A *cost that has a bearing on a decision making process or that is affected by a decision making process. See also *avoidable cost, *controllable cost, and *discretionary cost … Auditor's dictionary
Существенные затраты (RELEVANT COST) — Затраты, которые необходимо учитывать при выборе альтернативного решения. Для принятия решений существенную роль играют только те затраты, которые еще не понесены (являются будущими) и отличаются от альтернативных (дифференциальных) … Словарь терминов по управленческому учету
Cost-plus pricing — is a pricing method used by companies to maximize their profits. The firms accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost, and then charging a price which is determined … Wikipedia
relevant costs/revenues — Fin costs and revenues appropriate to a specific management decision. These are represented by future cash flows whose magnitude will vary depending upon the outcome of the management decision made. If stock is sold by a retailer, the relevant… … The ultimate business dictionary
cost tracing — The process of assigning direct costs to the relevant cost objects. Compare: cost allocation … Accounting dictionary
cost tracing — The process of assigning direct costs to the relevant cost objects Compare cost allocation … Big dictionary of business and management
Cost-benefit analysis — is a term that refers both to:* a formal discipline used to help appraise, or assess, the case for a project or proposal, which itself is a process known as project appraisal; and * an informal approach to making decisions of any kind. Under both … Wikipedia
Cost–benefit analysis — (CBA), sometimes called benefit–cost analysis (BCA), is a systematic process for calculating and comparing benefits and costs of a project for two purposes: (1) to determine if it is a sound investment (justification/feasibility), (2) to see how… … Wikipedia