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the term irrelevant cost to represent a business cost that does not impact a management decision. This cost can be positive or negative and may include overhead costs, book values, sunk costs, notional costs, non-monetary costs or fixed expenses. It is important to note, however, that an irrelevant cost is not always irrelevant depending on the situation. In one decision a specified cost may be irrelevant to that decision, but with another managerial decision that cost may indeed be relevant, thus the term relevant cost, which is decision specific. Since an irrelevant cost does not impact a managerial decision, in all likelihood the cost will not change that decision.
Thanks for the invitation..it is the cost that remain unaffected by manager's decision..it means it does not take into account when managers take decisions..it neither positive nor negative.
Irrelevant Cost can be defined as a cost which is not of relevance in making a particular decision i.e. a cost which occurrence or non occurrence doesn't affect a decision.
Irrelevant cost is cost does not changing between alternatives when the company needs to take a future decision .
Expenditures of directors
Irrelevant costs are that parts of costs that won`t affect management`s decision depending on their level of materiality
An irrelevant cost is a cost that will not change as the result of a management decision. However, the same cost may be relevant to a different management decision. Consequently, it is important to define those costs that should be excluded from consideration when reaching a decision.
For example, the salary of an investor relations officer may be an irrelevant cost if a management decision relates to issuing a new product, since dealing with investors has nothing to do with that particular decision. However, if the board of directors is considering taking the company private, then it may no longer need an investor relations officer; in the latter case, the salary of the investor relations officer is highly relevant to the decision. As another example, the rent for a production building is irrelevant to the decision to automate a production line, as long as the automated equipment is still housed within the same facility.
Non-cash items, such as depreciation and amortization, are frequently categorized as irrelevant costs for most types of management decisions, since they do not impact cash flows.
Sunk costs, such as the purchased cost of a fixed asset that was incurred in a prior period, are also usually considered irrelevant when making decisions on a go-forward basi
I agree with most of answer provided
Irrelevant cost is a cost that is not useful in decision-making or does not change between alternatives.
An irrelevant cost is a cost that will not change as the result of a management decision. However, the same cost may be relevant to a different management decision. Consequently, it is important to define those costs that should be excluded from consideration when reaching a decision.
Non-cash items, such as depreciation, provisions and amortization, are frequently categorized as irrelevant costs for most types of management decisions, since they do not impact the statement of cash flows.
These costs are called on margin costs are similar incidental expenses do not affect the decision-making does not affect my game Workflow
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