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Is allowance for administration cost a relevant cost.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Is allowance for administration cost a relevant cost.

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • February 16, 2015 at 11:51 am #228581
    AvatarAbdul
    Member
    • Topics: 15
    • Replies: 28
    • ☆

    I came across a question which says “It is company policy to add 20% to the production cost as an allowance against administration costs associated with the jobs accepted”

    Is this a relevant cost? Do we include this to find the cost for the one-off order?

    February 16, 2015 at 5:30 pm #228679
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    It is not a relevant cost.

    If you are asked simply for the total cost then it is irrelevant, because it does not involve the company paying any additional costs in total.

    February 16, 2015 at 6:19 pm #228696
    AvatarAbdul
    Member
    • Topics: 15
    • Replies: 28
    • ☆

    Thank you sir!

    February 17, 2015 at 7:18 am #228756
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    You are welcome 🙂

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