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Technical Skill (Relevant costs (Definition (FUTURE, CASH, and INCREMENTAL…
Technical Skill
Relevant costs
Definition
FUTURE, CASH, and INCREMENTAL costs directly arising as the result of an investment decision.
Future cash flows
Relevant cash flows are always related to the future and there must be an actual cash flow associated with it.
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Opportunity costs
Opportunity cost is the benefit sacrificed (lost contribution) by choosing one decision over another.
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Sunk costs
This cost has occurred in the past and therefore is no longer relevant as the money is already spent.
Committed costs
A committed cost is a Future Cash flow but one which will be incurred irrespective of the decision being made and so is not relevant to the decision making process.
Allocated costs
Costs are often allocated from another part of the business, for instance, for the use of central services. As these costs are incurred by the business as a whole irrespective of whether a project proceeds or not, they are not relevant to the decision on that project.
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IAS 37- Provisions, contingent liabilities & Contingent assets
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being able to supply a product or service at a cost lower than those of competitors. It does not mean that the company are the cheapest in terms of the price the consumer pays for your goods and services, just that internal costs are the lowest.
the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition.
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the organisation focuses effort and resources on a narrow, defined segment of a market. This strategy is often used by smaller organisations who can not afford to target the market as a whole.
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