Acc501 Module 3 Slp

TUI University

Jag Persaud

Module 3 SLP

Professor: Dr. M. Austin Zekeri

ACC501 - Accounting for Decision Making

June 24th 2011

Relevant cost is used to describe costs that are specific to management's decisions. The

concept of relevant costs eliminates unnecessary data that could complicate the decision-making

process.    Relevant costs are decision specific, meaning that a relevant cost may be important in

one situation but irrelevant in another. Examples of when management uses relevant costs can be

seen when it is determining whether to sell or keep a business unit, make or buy an item, or

accept a special order. (Jay, 2004).

Relevant cost :

Let us take an example for Dell Computer, Inc.

Dell wants its name to ring from the desktop to the data center. One of the world's top

suppliers of PCs, the company offers a broad range of technology products for the consumer,

education, enterprise, and government sectors. In addition to a full line of desktop and notebook

PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and

peripherals, such as displays and projectors. It also markets third-party software and hardware.

The company's growing services unit provides asset recovery, financing, infrastructure

consulting, support, systems integration, and training. Dell generates nearly half of its revenues

outside the US. (Bloomberg, 2011).

Dell Inc. said its quarterly profit nearly tripled on strong sales to businesses and lower

component costs, as the computer giant made progress in its long turnaround effort.

Strong results benefited from lower costs and higher profit margins on...