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Relevant cost is an accounting discipline which makes assignment writing a difficult task for the students. This is a complex subject for the students and understanding its concepts can become more complicated for the learners. For every student pursuing their career in Economics and finance, this is a mandatory domain of study for them and is also studied under managerial accounting courses in different universities around the world.

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What are the difficulties faced by students while completing their relevant cost assignments?

Firstly, a student should be able to distinguish between relevant cost and irrelevant cost. This course of study also evaluates their analytical skills and tests them for contrasting situations that they might face later in their career management. With all these factors in mind, the students possibly face difficulties in solving their assignments on time. Also, students do not have adequate time for their work accomplishment.

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Characteristics of relevant cost-

Exactly explaining, this study area means dealing with costs that crash and make a vast difference when compared to the competing alternatives. This kind of cost carries two wide features that are:

  • They differ between alternatives - The cost does not become relevant if the same costs are incurred for both the other options. It will only become relevant if the expenditure incurred for the options are different.
  • They are expected future costs- All future costs do not need fully applicable to decision-making purposes, but no prices are relevant to a lesser extent they pertain to the future. Expected future costs suggest that the costs are supposed to occur throughout the time covered by the decision. Pastor historical costs are relevant to the decision only if they are supposed to continue in the future.

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What is the relevant cost?

Relevant cost is also recognized as differential cost and is divided into two categories, i.e., future cost and opportunity cost and they vary according to the context of the choice. Relevant cost is used to erase needless information from a particular decision-making. There are four types of relevant cost which students need to study and write assignments in-

  • Future cash flows- As a result of relevant cost decision, all the cash expense that will arouse in the future is recognized as future cash flow.
  • Avoidable costs- In avoidable costs, if a decision is not implemented it can be avoided.
  • Opportunity costs- AAs a result of a particular management decision, the cash inflows that will be sacrificed is an opportunity cost.
  • Incremental costs- Where contrasting alternatives are being considered, relevant cost is the additional or differential cost of the various options being well thought out.

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