ACTG2020_Week5 2014 Ch12CMD (1)

ACTG2020_Week5 2014 Ch12CMD(1)

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Unformatted text preview: .. no difference in the cost, so it is not relevant The $5,000 proceeds will only be realized if we The $5,000 proceeds will only be realized if we replace the old loader. This amount is rrelevant.. replace the old loader. This amount is elevant Total and Differential Cost Approaches The difference in operating costs is rrelevant The difference in operating costs is elevant The The to the immediate decision. tto the immediate decision. o to Total and Differential Cost Approaches Here is the differential analysis that includes only relevant costs: Total and Differential Cost Approaches Using the differential approach is desirable for two reasons: 1. Only rarely will enough information be available to prepare detailed income statements for both alternatives. 2. Mingling irrelevant costs with relevant costs may cause confusion and distract attention away from the information that is really critical. Total and Differential Cost Approaches The management of a company is considering a new labour saving machine that rents for $3,000 per year. Data about the company’s annual sales and costs with and without t...
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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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