UrbanPro
true

Take ACCA Exam Coaching from the Best Tutors

  • Affordable fees
  • 1-1 or Group class
  • Flexible Timings
  • Verified Tutors

Search in

Relevant v/s. Irrelevant Cost

F
FR Prashanth Reddy
05/03/2018 0 0

The purpose of classifying cost into relevant and irrelevant is to eliminate unnecessary information that complicates the process of decision making.

Relevant Cost: Cost which will be affected by the decision being taken. It is relevant for decision making. They affect the future cash flow of the enterprise.

Conditions to be satisfied for relevant cost:

  1. It should occur in future
  2. It should differ among the alternative course of action

Example of Relevant cost: Avoidable Cost, Opportunity cost, Future Cash flows etc.

Irrelevant Cost: Cost which remain unaltered regardless of decision being taken. It is irrelevant for decision making. They don’t affect the future cash flow of the enterprise.

Example of Irrelevant cost: Sunk Cost, non cash expenses, general overheads etc.

0 Dislike
Follow 6

Please Enter a comment

Submit

Other Lessons for You

Valuation of stock
Stock valuation is a cumbersome process. A business can adopt numerous methods of valuation of stock viz , FIFO, LIFO, AVERAGE, WEIGHTED AVERAGE, etc Irrespective of the usage of various method of...

GST Composition Levy-Section 10 (GST made easy by Devendra Kumar Sir) Free Demo Class on GST (Indirect Tax)
Composition Leavy: Introduction The objective of composition scheme is to bring simplicity and to reduce the compliance cost For the small taxpayers. Supplier opting for composition leavy need not worry...

Essential Elements of a Valid Offer
Following are the essential elements of a valid offer: The offer must be communicated to the other party: The offer is completed only when it has been communicated to the offeree. Until the offer is...

Adam Smith's Economic theory
The classical principle of unfastened marketplace economics, to paintings right, has greater necessities than maximum fans realize of or intentionally pick out to ignore. Several years earlier than he...

Bank Reconciliation to be or not to be
Bank Reconciliation Statement plays an important role for every budding or wanna be accountant. Hence it's important to understand not only the concept but also implement it whenever we get a chance. Its...
X

Looking for ACCA Exam Coaching Classes?

The best tutors for ACCA Exam Coaching Classes are on UrbanPro

  • Select the best Tutor
  • Book & Attend a Free Demo
  • Pay and start Learning

Take ACCA Exam Coaching with the Best Tutors

The best Tutors for ACCA Exam Coaching Classes are on UrbanPro

This website uses cookies

We use cookies to improve user experience. Choose what cookies you allow us to use. You can read more about our Cookie Policy in our Privacy Policy

Accept All
Decline All

UrbanPro.com is India's largest network of most trusted tutors and institutes. Over 55 lakh students rely on UrbanPro.com, to fulfill their learning requirements across 1,000+ categories. Using UrbanPro.com, parents, and students can compare multiple Tutors and Institutes and choose the one that best suits their requirements. More than 7.5 lakh verified Tutors and Institutes are helping millions of students every day and growing their tutoring business on UrbanPro.com. Whether you are looking for a tutor to learn mathematics, a German language trainer to brush up your German language skills or an institute to upgrade your IT skills, we have got the best selection of Tutors and Training Institutes for you. Read more