Professional Documents
Culture Documents
Topics coverage:
1) Job Order Costing
2) Differential cost analysis, and Decision-making
3) Accounting for Quality Costs
Note: The business may also opt to include the amount to be billed to the customer.
Relevant costs are future costs that differ from one alternative to the other. So, if a cost will
not change, it is no longer included in the analysis.
Differential analysis is used when there are more than one alternative courses of actions for
a problem. There is no decision to make when there is only one solution to a problem.
Decision-making could involve short-term, non-routine, or long-term (strategic) decisions.
The basic rule is to take the action that will give the business the highest income or the lowest
loss.
ACCOUNTING FOR QUALITY COSTS
God bless on your comprehensive exams!