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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › RELEVENT COSTING
I do not understand stay clean question from 2009 june.In that question its asked to state whether shutting down of TD is worth shutting now or after 12 months.My question is that two situations will have to be analysed right to know that. Can u please explan it to me step by step?
The approach to deciding whether or not it is worth stopping now is to calculate the incremental benefits (e.g. saving on labour) and incremental costs (including opportunity costs e.g. lost revenue) of stopping now as against continuing for one year.
If there is a net benefit then they should stop now. If there is a net cost (as there is here) then they should not stop now.