Question

9. In a situation when the decision is to be taken about acceptance
or rejection of special orders where there is a sufficient idle
capacity which one is not relevant for decision making
a)Absorption cost
b) Variable cost
c) Differential cost
d) Incremental cost​

Answer 1

Answer:

Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions. ... As an example, relevant cost is used to determine whether to sell or keep a business unit.

Answer 2

Answer:

Option a: Absorption cost

Explanation:

1. absorption cost :entails allocating fixed overhead costs to all units produced for an accounting period.absorption cost takes into account all  production cost.

2. variable cost: includes all of the variable direct costs in cost of good

sold but excludes direct, fixed overhead costs.

3. differential cost: the difference between the cost of two alternative decisions .

4. incremental cost: the cost incurred due to an additional unit of product being produced.

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