Larry D. Twyman, Sr.
B6450 Financial Strategies for Managers: An Intergrated Approach
M6A1: Types of cost and Decision-Making
Dr. Wayne Hollman
December 2, 2011
Definitions of the kinds of cost:
drop down Costs - coin already spent and that is lost permanently. They are costs from past opportunity costs that are partially salvaged, if possible, or totally irretrievable and, should be considered irrelevant to future last making. It is also called embedded cost; prior year cost, detached cost, or sunk capital.
It is an expression representing the unrecoverable amount of m unmatchedy that has already been placed into an ongoing enthronement or project. It is one of the simplest and most commonly misused financial measurements of a project. Sunk costs are positive because no further investment is required. On the other hand, a sunk cost may be negative; for example, that old piece of equipment may consecrate down after its warranty has expired. This means that the owner willing not recover the costs no matter what happens (.thefreedictionary.com).
pertinent costs- Cost or expense attributable or guilty to one or more activities on the basis of benefits sure or nigh other logical relationship.
It is also differential or quantifiable future cost that must be considered in making a particular decision.
In managerial accounting, costs relating to decisions executives are able to make. For example, employee salaries may be a relevant cost because executives decide how much to pay their employees and advise raise or lower them according to need and efficiency. some(prenominal) costs may be irrelevant under some circumstances but relevant under other circumstances.
coach Costs Construction costs that are readily identifiable, such(prenominal) as labor, materials, and construction management fees. Contrast with indirect or soft costs which cover an allocation for overhead accession all expenses spent away from the construction site, such as legal, accounting, permitting, and...If you want to get a full essay, order it on our website: Ordercustompaper.com
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