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’.

Question

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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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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.