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John Moffat.
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maximus07
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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.
John Moffat
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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.
maximus07
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Alright sir.
John Moffat
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You are welcome
maximus07
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