Relevant cost are future cash flows arising as a direct consequence of decision.
Relevant cost must be:
- the cost that will occur in the future
- cost that will result in the cash flow
- arise as direct consequence of the decision
Sunk cost and committed cost are not relevant cost.
Author: amidu edson
I am certified accountant with more than 5 years of teaching experience. Currently am teaching auditing and assurance, management accounting and financial accounting for student preparing for professional exams such as ACCA and CPA.
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