Accounting Module 5 SLP Assignment Example | Topics and Well Written Essays - 250 words

Accounting Module 5 SLP - Assignment Example pertinent monetary values are also called differential be. If the future costs are going to be incurred unheeding of the decision that is made, those costs are not applicable. Sunk costs are never relevant.The repair cost of $26000 is relevant to the decision on hand whether to sell the truck or get it repaired. The sale carry on offered by repair shop of $ ten thousand is also relevant. The purchase cost of utilize truck of $ 34000 is relevant to the decision.The amount offered by the insurance company of $30000 would be the same whether Pizzahut gets the truck repaired or disposes the truck and purchases the used truck. Since the amount is same under both the alternatives it is a non-relevant cost. Similarly, the original cost of truck of $50000 is a sink cost and would be same under both the alternatives and hence it is also a non-relevant cost. The classification of costs into Relevant and non-relevant costs aids in decision makin g. The cost with respect to the alternative of disposing the truck is $34000 - $10000 which is equal to $24000. Thus, the gain to the company in choosing this alternative is $26000(cost of repair) minus $24000, which is $2000. Thus, the analysis helped the company reach a decision which resulted in a gain of $2000 to the company.1. Dennis Caplan, Management Accounting Concepts and Techniques, Retrieved on December 21st 2009, from operating room State University, College of Business Web Site,