An avoidable cost is a cost that can be eliminated in whole or in part by choosing one alternative over another. By choosing the alternative of going to the movie, the cost of renting the videotape can be avoided, by choosing, the alternative of renting the video tape, the cost of the movie ticket can be avoided.
Only those costs and benefit that differ in total between alternatives are relevant in a decision. If a cost will be the same regardless of the alternative selected, then the decision has no effect on the cost and it can be ignored.
Only those costs and benefit that differ in total between alternatives are relevant in a decision. If a cost will be the same regardless of the alternative selected, then the decision has no effect on the cost and it can be ignored.
Avoidable costs are relevant costs. And unavoidable costs are irrelevant costs. The Matter of Opportunity Cost
The economic benefits that are foregone as a result of pursuing some course of action. Opportunity costs are not actual dollar outlays and are not recorded in the accounts of an organization.
Two board categories of costs are never relevant in decision. These irrelevant costs are,
1. Sunk Cost
2. Future costs that do not differ between the alternatives.
Now short details about sunk cost and future cost.
SUNK COST
A sunk cost is a cost that has already been incurred and cannot be avoidable regardless what a manager decide to do. Sunk costs are always the same, no matter what alternative are being considered. And they are always irrelevant and they should be ignored.
FUTURE COST
Future costs that do not differ between the alternatives are relevant.
With this two types of costs, differential costs and joint costs are also needed for solve problems.
DIFFERENTIAL COST
Any cost that differs between alternative between a decision making situations. This term is synonymous with avoidable cost and relevant cost.MORE>>>>
The economic benefits that are foregone as a result of pursuing some course of action. Opportunity costs are not actual dollar outlays and are not recorded in the accounts of an organization.
Two board categories of costs are never relevant in decision. These irrelevant costs are,
1. Sunk Cost
2. Future costs that do not differ between the alternatives.
Now short details about sunk cost and future cost.
SUNK COST
A sunk cost is a cost that has already been incurred and cannot be avoidable regardless what a manager decide to do. Sunk costs are always the same, no matter what alternative are being considered. And they are always irrelevant and they should be ignored.
FUTURE COST
Future costs that do not differ between the alternatives are relevant.
With this two types of costs, differential costs and joint costs are also needed for solve problems.
DIFFERENTIAL COST
Any cost that differs between alternative between a decision making situations. This term is synonymous with avoidable cost and relevant cost.MORE>>>>
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