ACTG2020_Week5 2014 Ch12CMD (1)

Collect the data 6 make a decision class 5 actg 2020

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Unformatted text preview: a Decision Class 5 ACTG 2020 7 Relevant Information Information is relevant to a decision problem when . . . 1. It has a bearing on the future, 1. It has a bearing on the future, 2.. It differs among competing alternatives. 2 It differs among competing alternatives. Class 5 ACTG 2020 8 Cost Concepts for Decision Making A relevant cost is a cost that differs between alternatives. Avoidable costs are relevant cost. Unavoidable costs are irrelevant. LO 1 Identifying Relevant Costs Two broad categories of costs are never Two broad categories of costs are never relevant in any decision. They include: relevant in any decision. They include: Sunk costs. Sunk costs. Future costs that do not differ between the Future costs that do not differ between the alternatives. alternatives. LO 1 Opportunity Costs Class 5 An opportunity cost is the cost of a forgone alternative. Because of limited resources, companies must frequently pass up profitable (beneficial) projects. The profit (benefit) forgone becomes an oppo...
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This note was uploaded on 03/28/2014 for the course ACTG 2020 taught by Professor Lizfarrel during the Spring '11 term at York University.

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