Relevant costs are those costs that change with each decision you make. If you have two choices, and you choose A instead of B, relevant costs are those costs that will be different from those associated with choice B. These are costs that directly affect cash flow, the money coming in and going out of a business. Relevant costs include differential, avoidable, and opportunity costs.
Irrelevant costs are those that will not change in the future when you make one decision versus another. They are costs that will continue to happen.
Relevant & Irrelevant Costs for Decision-Making
Sliideshare - relevant costing for decision making
~ THANK YOU ~
0 Comments