Concept explainers
Concept Introduction:
Managerial Decision:
Decision making plays an important role in the management. The decisions taken by managers are called managerial decisions. Managerial Decisions are decisions taken by managers for the operations of a firm. These decisions include setting target growth rates, hiring or firing employees, and deciding what products to sell. Manager's decisions are taken on the basis of quantitative as well as the qualitative measures. The managerial decision includes the decisions like make or buy, accept or reject new offers, sell or further process etc. These decisions are taken on the basis of relevant costs.
Relevant costs are the costs that are relevant for any decision making. Relevant costs are helpful for take managerial decisions like make or buy, accept or reject new offers, sell or further process etc.
Two basic types of the relevant costs are as follows:
- Out-of-pocket costs
- Opportunity costs
To Identify:
The relevant and irrelevant costs for the purpose of making decision to accept the order

Answer to Problem 1QS
The relevant and irrelevant costs for the purpose of making decision to accept the order are identified as follows:
Item | Relevant | Not Relevant |
a. | X | |
b. | X | |
c. | X | |
d. | X | |
e. | X | |
f. | X | |
g. | X | |
h. | X |
Explanation of Solution
Relevant costs are the costs that are relevant for any decision making. Relevant costs are helpful for take managerial decisions like make or buy, accept or reject new offers, sell or further process etc.
The relevant and irrelevant costs for the purpose of making decision to accept the order are identified as follows:
Item | Relevant | Not Relevant |
a. | X | |
b. | X | |
c. | X | |
d. | X | |
e. | X | |
f. | X | |
g. | X | |
h. | X |
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Chapter 25 Solutions
FUNDAMENTAL ACCT PRINCIPLES LL W CONNECT
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