208691
Descripción
Mapa Mental por Shahid Musthafa, actualizado hace más de 1 año
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Creado por Shahid Musthafa
hace alrededor de 11 años
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Relevant Cost Principles
- Future
- A decision made today cannot change the past and so only future
costs are considered for the decison making .Past costs are treated
as sunk cost and cost resulting from contractual obligation are
considered as committed costs which is also not accounted
- A decision made today cannot change the past and so only future
costs are considered for the decison making .Past costs are treated
as sunk cost and cost resulting from contractual obligation are
considered as committed costs which is also not accounted
- Incremental
- Only those costs effected by the
decisions are only considered
.Committed costs are ignored
- Only those costs effected by the
decisions are only considered
.Committed costs are ignored
- Cash flow
- To evaluate a decision actual cash flows are
considered .The cost forming as a part of
accounting conventions such as depreciation
and amortization are not relevant.Accounting
adjustments such as interdepartmental
charges are also not considered
- To evaluate a decision actual cash flows are
considered .The cost forming as a part of
accounting conventions such as depreciation
and amortization are not relevant.Accounting
adjustments such as interdepartmental
charges are also not considered
- Oppurtunity costs
- The value of benefit sacrificed when one course of
action is chosen, in preference to an alternative. The
opportunity cost is represented by the foregone potential
benefit from the best rejected course of action.
- The value of benefit sacrificed when one course of
action is chosen, in preference to an alternative. The
opportunity cost is represented by the foregone potential
benefit from the best rejected course of action.
- In simple terms, a relevant cost is a future
cash flow arising as a direct consequence
of a decision. In order for a cost to be
relevant to a decision, it must therefore
meet all four of these criteria:
- Remmember that sum of relevant cost
is not the price to be caculated for the
decison , a mark-up needs to be put
inorder for the decision to be
successful
- It does not always take the current
business overheads into the
scenario of decison making
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