BSNS107 week 9

Relevent cost concepts include:
- Differential Cost
- Opportunity Cost
Irrelevent cost concepts include:
- Allocated Cost
- Sunk Cost
Short run decisions include:
- Special Pricing
- Make or Buy
- Product Mix Decision
What 3 things should you consider when making a special pricing decision?
- It the firm operating above break-even?
- Is there capacity?
- Will it result in a positive CM?
Relevant costs include :
- Direct Materials
- Direct Labour
- Variable Overhead
In a make or buy decision the relevent cost is the cost that can be:

Avoided by outsourcing
Direct Costing per unit

(DM + DL + VOH) / units
Absorption Costing per unit

(DM + DL + VOH + FOH) / units
Income Statement format
- Revenue
- (COGS)
- Gross Profit
- (Fixed OH)
- (Other expenses)
- Net Income
Predetermined OH application rate:
- POAR= Estimated MOH
- Estimated Units (driver)
Overhead applied:

Overhead applied = POAR x actual activity

Author

rosme090

89600

Card Set

BSNS107 week 9

Description

Planning and Decision Making

Updated

2011-06-07T10:39:00Z

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