RSM322 TopicC - 1/26/2011 1 2 Agenda Definition of Relevant...

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1/26/2011 1 Topic C Decision Making with Relevant Costs While you are waiting, please take out and display your name cards 1 Agenda Definition of Relevant Costs Appropriateness of Use Specific Situations Implementation Issues 2 Definition of Relevant Costs Relevant costs are future costs which should make a difference in choosing between alternatives Relevant costs are unique to the type of decision being made Definition of Relevant Costs Relevant costs are primarily cash inflows and outflows such as changes in revenues, working capital, costs and taxes paid Irrelevant costs primarily include non- cash expenses such as depreciation and amortization, allocated fixed costs, and any costs which do not differ among alternatives
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1/26/2011 2 Appropriateness of Use When making internal management decisions which are made irregularly It is inappropriate to use relevant costing in establishing a “normal” price for your product because it does not consider all costs
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This note was uploaded on 04/23/2011 for the course RSM 322 taught by Professor Lisaharvey during the Spring '11 term at University of Toronto- Toronto.

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RSM322 TopicC - 1/26/2011 1 2 Agenda Definition of Relevant...

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