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Mas Reviewer Relevant Costing PDF
Mas Reviewer Relevant Costing PDF
Decision-making is an integral part of all management functions. It is the process of choosing among
alternative courses of action. Managers have to spend a considerable amount of time and thought in making
decisions.
Costs, which affect the managerial decisions, are called relevant costs. Relevant costs, also referred to as
differential costs, are costs that will be different when one alternative is selected over competing alternatives. All
types of costs are not relevant. Only the costs, which are futuristic in nature and differ among alternatives, are
considered as relevant costs.
While making decisions, management compares two or more alternatives. Differential cost analysis or
differential costing is a special technique to help management in decision-making which shows how costs and
revenues would be differ under different alternative courses of action.