ACCT729 - Chap 4
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What is a relevant cost?
Future costs that differ among competing decision alternatives.
What are irrelevant costs?
Future costs that do not differ among competing decision alternatives.
Are future revenues relevant or irrelevant?
Depends. If revenues differ between alternatives - yes. If they don't, no.
What are outlay costs? Give an example of one.
- - Outlay costs require future expenditures of cash or other resources.
- - Example: Suppose a firm is thinking about replacing a machine; the cost of a new machine would be a relevant outlay cost.
What would you like to do?
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