<![CDATA[Relevant cost has been considered as an important factor in decisionmaking based on the concept of different analysis for different purposes. Onetype of relevant cost is incremental cost, which is additional cost when analternative is not chosen in a process of decision making.A decision can be classified as long and short range decision. Example ofshort range decision is special order, which is order from a buyer asking pricebelow normal price, and often management directly refuses this order withoutfurther consideration. Concept of incremental cost can be used to evaluate thiskind of problem.Some considerations in implementing the concept include costidentification, idle capacity, and variable costing system. Incremental costanalysis involves comparison among additional order, additional cost andcontribution margin from the special order. This concept supported by variablecosting method is important for companies implementing job order costing systembefore deciding to accept or refuse a special order.]]>
Copyrights © 2010
