Chapter 10: Differential Analysis (or Relevant Costs)

Course Learning Objectives

By the end of this section, you will be able to:

  • Analyze product costs for planning and decision making.

Specific Learning Outcomes

  • Identify relevant costs and apply them to managerial decisions.
  • List the necessary criteria that make information relevant to a decision involving two or more alternative courses of action.
  • Describe the nature of differential analysis and illustrate its application to decisions involving:
    1. Accepting business at a special price
    2. Discontinuing an unprofitable segment
    3. Making or buying
    4. Replacing a long term asset
    5. Processing or selling