What is relevant cost in accounting, and why is it important?

What is relevant cost in accounting, and why is it important?

Which of the following is not a relevant cost?

The opportunity cost of using land to build a factory is not a relevant cost when deciding whether or not to build the factory. The opportunity cost is the cost of the next best alternative use of the land. In this case, the opportunity cost is not relevant because it is not a cost of building the factory. Is a relevant cost a fixed cost? A relevant cost is a cost that is relevant to a decision-making process. A relevant cost is used in decision-making because it is an incremental cost, which is a cost that would be incurred as a result of a decision. A relevant cost is also a future cost, which means that it is a cost that has not been incurred yet, but will be incurred if a decision is made. A relevant cost is not a sunk cost, which is a cost that has already been incurred and cannot be changed.

Which of the following best describes relevant cost? The term "relevant cost" refers to those costs that are relevant to a particular decision. In other words, relevant costs are those costs that will be affected by a decision. For example, if a company is considering whether to produce a product in-house or outsource it to a third-party supplier, the relevant costs would include the costs of materials, labor, and overhead. What is another name for a relevant cost quizlet? The other name for a relevant cost quizlet is an opportunity cost quizlet.

What factors determine whether a cost is relevant to a decision?

The definition of relevant cost is: "A cost that differs in amount between two alternative courses of action and, therefore, affects the decision."

There are several factors that determine whether a cost is relevant to a decision:

1. The cost must be incurred in the future. This is because relevant costs are used to predict future costs and, therefore, future profitability.

2. The cost must be different between the two alternative courses of action. This is the key criterion that differentiates relevant from irrelevant costs.

3. The cost must be relevant to the decision maker's objectives. This means that the cost must be important to the decision maker in terms of the impact it will have on the decision.