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Costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Costing

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • June 15, 2021 at 4:12 pm #625351
    maximus07
    • Topics: 374
    • Replies: 379
    • ☆☆☆☆

    A fixed overhead per unit is relevant cost or not?
    According to me, it is. If we avoid making units so it may not be avoided. But it is written that it is irrelevant. Please explain.

    June 16, 2021 at 9:12 am #625396
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49611
    • ☆☆☆☆☆

    It depends on question being asked.

    However, for decision making, fixed costs are only relevant if the total fixed cost will change as a result of the decision. Unless we are specifically told that it will change (in which case the extra cost is relevant) we assume that total fixed costs will (by definition) stay the same and are therefore not relevant.

    June 16, 2021 at 9:22 am #625402
    maximus07
    • Topics: 374
    • Replies: 379
    • ☆☆☆☆

    Alright sir.

    June 16, 2021 at 10:02 am #625417
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49611
    • ☆☆☆☆☆

    You are welcome

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