Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision. To Discuss: The term ‘relevant cost’.

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Answer 1

Question

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.

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ABF's metal spare parts manufacturing company uses the customised production method by attributing the GST to the products it produces with the help of predetermined attribution coefficients. The processing of metal parts is carried out in two production departments: the Cutting and Drilling department, and the Assembly department. The GIS attribution coefficients for the two departments are based on the operating hours of machines and the cost of direct work respectively. At the beginning of the year, the following budgets were implemented: Cutting and Drilling Department Assembly Department Direct Labor Costs (in euros) 1.320.000 2.000.000 G.B.E. (in euros) 4.800.000 2.400.000 Machinery Operating Hours 80.000 5.000 Direct Work Hours 27.000 12.000 Requested: To calculate the coefficient of attribution of the General Secretariat that will be used in each department. (4 units) To determine the production cost per unit for order 158 which…

Answer 2

Question

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.

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Answer 3

Question

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.

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Answer 4

Question

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.

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Answer 5

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.

Answer 6

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.

Answer 7

Chapter 12, Problem 1Q

To determine

Determination of relevant cost describes the concept of relevant concept in decision making. The relevant cost is the cost which has the impact of change with the implementation of decision.

To Discuss: The term ‘relevant cost’.

Answer 8

Expert Solution & Answer

Answer to Problem 1Q

Solution: The relevant cost is the cost incurred while making decisions. It refers to incremental cash outflows to be incurred as a result of decision implementation, opportunity cost to be foregone for implementing the decision and the cost which is avoidable with the implementation of decision.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The Relevant cost in the decision making is a cost which has the relevance while taking up managerial decisions. These are referred to as all those cost which has the impact of change (whether increase or decrease) with the implementation of decisions taken. These are referred to as following cost:

Cash outflows need to be undertaken for implementing any project/decision and it is the relevant cost for the project/ decision.
If the decision is to choose between the alternatives, then the relevant is the incremental cost to be incurred in a particular alternative than the cost incurred in other alternative.
The Relevant cost also includes the opportunity cost of the next best alternative. The opportunity cost is the amount of revenue/income generated from present project, which has to be sacrificed for undertaking the new opportunity.
The relevant cost is the cost which can be avoided if the decision is taken.

In other words, all those factors which have the impact of change in the cost shall be regarded as relevant and its cost shall be treated as relevant cost.

Answer 12

Conclusion

To conclude, it can be said that the relevant cost is the cost which changes with the decision making, and measuring these cost will have an impact on decision making.