11.1   Contrast relevant and irrelevant costs and revenues as well as quantitative and qualitative information influencing decisions.

 

1) The purpose of evaluating performance in the decision process is to provide feedback.

 

2) Anticipated future costs that differ with alternative courses of action are known as relevant costs.

 

3) Divisional revenues which remain at the same level from year to year are known as relevant revenues.

 

4) The total cost difference between two separate alternatives in a decision making process is considered to be its net relevant cost.

 

5) Each item included in the relevant-cost analysis should differ according to the alternative being considered and be an expected future revenue or cost.

 

6) Quantitative factors are always expressed in financial terms.

7) If a manufacturer chooses to continue purchasing direct materials from a supplier because of the on-going relationship that has developed over the years, the decision is based on qualitative factors.

 

8) When choosing between two alternatives, costs that do not differ between the two alternatives can be considered to be irrelevant to that decision.

 

9) Management accountants help managers identify what information is relevant and what information can be ignored.

 

10) Relevant information analysis is a key aspect of making decisions.

 

 

 



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