Decision making using relevant cost principles
Relevant cost principles enable managers to make sound short-term commercial decisions by focusing on costs and revenues that actually vary with each decision scenario. This lesson covers how to identify and apply relevant costs across five key business situations: minimum pricing decisions, accept/reject scenarios, make or buy analyses, shutdown decisions, and further processing of joint products, with practical application through the Oilcorp Limited case study.
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Introduction to Relevant Costing Principles
- 1:11 Accept or Reject Scenario
- 2:09 Make or Buy Decision
- 3:34 Shutdown Decision Analysis
- 5:38 Further Processing of Joint Products
- 8:39 Example: Oilcorp Limited Case Study
About this lesson
Discover how to apply relevant cost principles for effective decision-making in business scenarios like minimum pricing, accept/reject decisions, make or buy analyses, shutdown decisions, and further processing of joint products. This video provides a comprehensive breakdown of each scenario, illustrating how to use relevant costs to make informed decisions that enhance profitability and efficiency. Learn the strategic importance of identifying and utilising relevant costs to optimise pricing, production, and operational decisions. Perfect for business professionals seeking actionable insights to drive smarter decisions.
Duration: 14m
- Relevant cost identification and analysis
- Accept or reject decisions
- Make or buy analysis
- Shutdown and discontinuation decisions
- Further processing of joint products
- Minimum pricing and contribution margin
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the P1 Objective Test course
All 104 video lessons, timed mock exams marked instantly with an explanation for every question, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in