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. Investopedia Says:
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. Related Terms:
Capacity Utilization Rate
Fixed Cost
Irrelevant Cost
Managerial Accounting
Sunk Cost
Variable Cost |