Irrelevance of Future Cost: In addition to pat cost, some future costs may be irrelevant because they will be the same under all feasible alternatives. Irrelevant Cost is an avoidable cost is a cost that…

Incremental cost can be defined as the encompassing changes experienced by a company within its balance sheet because of tint additional unit of production. It is the increase in total costs resulting from an increase…

Split-off-point: The split-off point is the point in a production process where jointly manufactured products are henceforth manufactured separately; thus, their costs can be identified individually after the split-off point. A split-off point is a…

Joint Product and Joint Cost Joint product: Two or more outputs generated simultaneously, by a single manufacturing process using common input, and being substantially equal in value. Joint products (such as butter. cheese, and cream…

Product costs: For financial accounting purpose, products costs are that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct material, direct labor, and manufacturing overhead.…

Segment Margin in Product Line Segment margin is the difference between the revenue of a segment and the direct costs of the segment represents the amount of income that has been earned by the particular…

Difference between Relevant Cost and Irrelevant Cost Relevant Cost is a cost that is pertinent to the decision being made. To be relevant, a cost must be a future expected cost that differs between alternatives.…

Irrelevant Cost: An avoidable cost is a cost that can be eliminated in whole or in part by choosing one alternative over another. These costs are those that will not change in the future when…

Relevant Cost: A cost that is pertinent to the decision being made. To be relevant, a cost must be a future expected cost that differs between alternatives. Relevant costs are those costs that will make…

Special sales order: Managers must often evaluate whether a special sales order should be accepted, and if the order is accepted, the price that should be charged. It is a unique one-time order made by…