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Understand the concept of relevant revenues and costs. What makes a revenue or cost relevant? a. future costs b. revenues that differ among alternitives 2.

Understand the concept of relevant revenues and costs. What makes a revenue or cost relevant? a. future costs b. revenues that differ among alternitives 2. Know and understand the following terms: Relevant Costs - Costs used in making a decision Differential Revenues - Future revenues that differ between alternatives Opportunity costs - A benefit sacrificed when one alternative is chosen over another Differential Costs - Costs used in a decision because they vary between alternatives Avoidable costs - Costs that can be eliminated by making another choice Sunk Costs Costs incurred in the past that cannot change and are not relevant to decisions - 3. Understand the concept of Cost Hierarchy and Cost Avoidance. What are the different cost hierarchies and when are they eliminated? a. Unit-level (eliminated when production of a single unit of product is eliminated) b. Batch-level (eliminated when a batch of work is eliminated) C. Product-level (must get rid of a product line to eliminate these costs) d. Facility-l

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Concept of Relevant Revenues and Costs Relevant revenues and costs are those that are pertinent to a particular decisionmaking situation What makes a revenue or cost relevant is its impact on the deci... blur-text-image

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