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Cost Accounting by V. Rajasekaran, R. Lalitha

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18

Differential Cost Analysis

LEARNING OBJECTIVES

After studying this chapter you should be able to:

  1. Understand the meaning of "differential costing".

  2. Know the basic features of differential costing.

  3. Understand the similarities and dissimilarities between marginal costing and differential cost analysis.

  4. Apply differential cost analysis in making policy decisions.

  5. Understand the concept of opportunity costing and its applications.

A management of any type of business organization is confronted with the problem of making appropriate decisions. “Behaviour of cost” plays a vital and crucial role in decision-making areas. Although the historical costs serve as an effective tool for predicting future costs, they are not suitable to decision-making ...

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