In this article we will discus about the meaning and characteristics of differential cost. Meaning of Differential Cost: Differential cost is the change in the costs which may take place due to increase or decrease in output change in sales volume, alternate method of production, make or buy decisions, change in product mix etc. So, differential cost is the result [...]
The following points highlight the top nine cost concepts used in decision making. The cost concepts are: 1. Marginal Cost 2. Out of Pocket Costs 3. Differential Costs 4. Sunk Costs 5. Opportunity Cost 6. Imputed Costs 7. Replacement Cost 8. Avoidable Cost and Unavoidable Cost 9. Relevant Cost and Irrelevant Cost. Decision Making: Cost Concept # 1. Marginal Cost: [...]
The following points highlight the top seven practical applications of differential cost. The practical applications are: 1. Determination of the most Profitable Level of Production and Price 2. Acceptance of Offer at a Lower Price or Offering a Quotation at Lower Selling Price in Order to Increase Capacity 3. Accept or Reject Decisions 4. Make or Buy Decisions 5. Sell [...]