RELEVANT COSTING

Question 1

what are the business decisions that is done by management?

Answer 1

1. Strategic Decisions - Long-term influence or effects
2. Tactical Decisions - Medium-Term Effects
3. Operational Decisions- Specific business; daily business

Question 2

Explain relevant costs

Answer 2

Future cost dapat, which differ between decision alternatives. Not all future costs ay relevant only those na differential.

Question 3

EXPLAIN THE MAKE OR BUY SHORT TERM NON ROUTINE MGT DECISIONS

Answer 3

MAKE: DM, DL, OH, VOIDABLE FC
BUY: PURCHASE PRICE, FREIGHT AND DELIVERY COST, VARIABLE MATERIAL HANDLING COST

Question 4

EXPLAIN ACCEPT OR REJECT

Answer 4

CAN BE WITH EXCESS CAPACITY: GR (DM, DL, VC, OH)
OR WITHOUT EXCESS CAPACITY GR + OC OR CM

Question 5

EXPLAIN KEEP OR DROP SEGMENT DECISION

Answer 5

SALES
-VC
-AVOIDABLE FC
SEGMENT MARGIN ——- retain if positive
—— eliminate if negative

Question 6

EXPLAIN SELL AS IS OR PROCESS FURTHER A PRODUCT DECISION

Answer 6

AT THE START KASI MAY JOINT COSTS (DM, DL, OH) common ‘to sa lahat ng products kay A B and C. At certain split off point may selling price dito, tapos sa dulo after further processing, tataas syempre ang SP. So ang rule is, Process Further if incremental revenue is greater than the incremental costs.
ano yung incremental revenue? ang incremental revenue yun yung increased in SP. Ang incremental costs naman ay FPC.