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

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

3. 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.

4. 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.

5. 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.