Relevant costing aids management in making non-routine decisions by analyzing relevant costs and benefits. Not all costs are useful in decision-making. Relevant costs refer to those that will differ between different alternatives. Irrelevant costs are those that will not cause any difference.
In this chapter, we will learn how to apply concepts of relevant costs in making non-routine decisions.
Non-routine decisions include: make or buy a product component, accept or reject a special order, sell or process further, add or drop a product line, and optimal product combination.