Describe the benefits of operating decisions - relevant cost, Managerial Accounting

Assignment Help:

Relevant costs and benefits for operating decisions:

In operating decisions, concentration is on best use of existing capacity. Incremental analysis based on differential cost and differential revenue is based directly on the concept of relevant cost and benefit. The term opportunity cost also springs from the thought underlying this concept.

Relevance of normal and abnormal cost:

The terms normal cost and abnormal cost, normal working conditions and abnormal cost cannot be treated alike. Similarly, cost accounting strategy for normal conditions will not hold good for abnormal conditions. The term normal stands for anything (cost of circumstances) which is in agreement with what is in agreement with what is representative, usual or regular. The term abnormal stands for anything (cost or circumstances) which is in agreement which is different from what is normal, ordinary or expected. Different cost accounting treatments are laid down for normal cost and abnormal cost.  

 


Related Discussions:- Describe the benefits of operating decisions - relevant cost

Explain the external factors of pricing decisions, Explain the External fac...

Explain the External factors of pricing decisions 1) Demand: the market demand for a product or service obviously has big impact on pricing. Since demand is affected by fact

Job order costing, Prepare Summary Journal Entries to record the( 1) requi...

Prepare Summary Journal Entries to record the( 1) requistion slips

Chapter 3, Cretin Enterprises uses a predetermined overhead rate of $21.40 ...

Cretin Enterprises uses a predetermined overhead rate of $21.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $171,200 of total manufact

Explain the interpretation of equity ratio, Interpretation of equity ratio ...

Interpretation of equity ratio As equity ratio show the relationship of owner funds to total assets higher the ratio or the share of the shareholders in the total capital of th

Explain indirect expanses, Explain Indirect expanses: These are expanse...

Explain Indirect expanses: These are expanses which can't be directly conveniently and wholly allocated to a specific cost centres or cost units examples of such expanses are h

State the steps for standard costing system, State the steps for Standard c...

State the steps for Standard costing system standard costing system involves the following steps 1) Setting-up of standards for each element of cost: standards should be s

Time series analysis, how do i use least squares method to solve semi avera...

how do i use least squares method to solve semi average problem?

Time series analysis, Conduct a time series analysis base on the three year...

Conduct a time series analysis base on the three years accounting ratios

Explain the shut down cost, Explain the Shut down cost A cost which wi...

Explain the Shut down cost A cost which will be still be required to be incurred even though a plant is closed or shut down for a temporary period. Ffor example the cost of

Financial perspective, Financial Perspective How do we produce value fo...

Financial Perspective How do we produce value for our shareholders? This perspective covers traditional measures e.g. growth, liability, shareholder value. But these are set on

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd