Relevant costing
In this lesson, you'll learn the principles of relevant costing and how to apply them to real business decisions. Relevant costing focuses on future costs and revenues that actually change based on your decision — ignoring sunk costs and historic expenses that won't affect the outcome.
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In this lesson
- 0:00 Relevant costing in business decisions
- 0:37 Break even analysis fundamentals
- 1:31 Principles of relevant costing explained
- 3:02 Real world applications of relevant costing
- 4:53 Make or buy decision worked example
- 7:01 Cash flow versus profit comparison
- 8:05 Other factors in commercial decisions
About this lesson
You'll explore how businesses use relevant costing for make-or-buy decisions, special orders, equipment replacement, and outsourcing choices, and see how to distinguish between costs that matter and those that don't. This awareness of relevant costing is important for your Strategic Business Leader work, where you'll need to evaluate options and build sound financial arguments that consider only the costs and benefits that genuinely impact the decision at hand.
Duration: 9m
Transcript
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