Relevant Cost

A managerial accounting term that is used to describe costs that are specific to management's decisions. The concept of relevant costs eliminates unnecessary data that could complicate the decision-making process.

Relevant costs are decision specific, meaning that a relevant cost may be important in one situation but irrelevant in another. Examples of when management uses relevant costs can be seen when it is determining whether to sell or keep a business unit, make or buy an item, or accept a special order.


Investment dictionary. . 2012.

Look at other dictionaries:

  • relevant cost — An expected future cost that varies with alternative courses of action. Decision making involves choosing between such alternatives and to make the best choice a manager needs to identify the future cash flows for each decision. Costs that have… …   Accounting dictionary

  • relevant cost — An expected future cost that varies with alternative courses of action. Decision making involves choosing between such alternatives and to make the best choice a manager needs to identify the future cash flows for each decision. Costs that have… …   Big dictionary of business and management

  • relevant cost — A *cost that has a bearing on a decision making process or that is affected by a decision making process. See also *avoidable cost, *controllable cost, and *discretionary cost …   Auditor's dictionary

  • Существенные затраты (RELEVANT COST)  — Затраты, которые необходимо учитывать при выборе альтернативного решения. Для принятия решений существенную роль играют только те затраты, которые еще не понесены (являются будущими) и отличаются от альтернативных (дифференциальных) …   Словарь терминов по управленческому учету

  • Cost-plus pricing — is a pricing method used by companies to maximize their profits. The firms accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost, and then charging a price which is determined …   Wikipedia

  • relevant costs/revenues — Fin costs and revenues appropriate to a specific management decision. These are represented by future cash flows whose magnitude will vary depending upon the outcome of the management decision made. If stock is sold by a retailer, the relevant… …   The ultimate business dictionary

  • cost tracing — The process of assigning direct costs to the relevant cost objects. Compare: cost allocation …   Accounting dictionary

  • cost tracing — The process of assigning direct costs to the relevant cost objects Compare cost allocation …   Big dictionary of business and management

  • Cost-benefit analysis — is a term that refers both to:* a formal discipline used to help appraise, or assess, the case for a project or proposal, which itself is a process known as project appraisal; and * an informal approach to making decisions of any kind. Under both …   Wikipedia

  • Cost–benefit analysis — (CBA), sometimes called benefit–cost analysis (BCA), is a systematic process for calculating and comparing benefits and costs of a project for two purposes: (1) to determine if it is a sound investment (justification/feasibility), (2) to see how… …   Wikipedia

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