Cost Accounting & Management Accounting

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Presentation transcript:

Cost Accounting & Management Accounting Decision Making Lecture-40 Main Ahmad Farhan

Terminologies Opportunity Cost Sunk Cost Avoidable Cost & Unavoidable Cost Fixed Cost Variable Cost Historical Cost Controllable Cost & Uncontrollable Cost

Relevant Costing Concept & Features Relevant Cost is future Cost which changes with the alternatives decisions. Relevant Cost also includes benefits forgone because of the alternative decision.

Features of Relevant Cost That effect the future Cost. That effect the future Cash flows. That cause an increment in Cost. That is an opportunity Cost.

Features of Relevant Cost Sunk cost and past cost are not relevant Cost. Committed cost is although a future cost but it is not a relevant cost. Relevant cost effects the future cash flows . Relevant cost is an incremental cost. Relevant cost is an opportunity cost. It is not an incurred cost but it is the loss of past profit because of the alternative decision.