Material cost is relevant or not
Material cost relevance is decided on the bases of it
replacement. The following three possible situations may occur in case of
material cost.
1. When the material is to be replaced then relevant cost of
material is replacement cost.
2. When the martial is not to be replace then higher of the
current resale value or alternative use is the relevant cost.
3. When the cost is not to be replaced and there is neither a
resale value nor alternative use then the relevant cost is zero.
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