Nov 30 2010
Managerial Accounting and Relevant Costs
Although when we began to look into the accounting side of business in comm. 101 it was described as dull and boring, I quite enjoyed the lectures, particularly class 12’s discussion. Specifically the various issues regarding new business ventures that were presented to us particularly caught my interest. Before this class I had simply looked at such ventures without realizing the costly effects of bringing specific projects underway. Undoubtedly each start-up venture has relevant costs to consider when commencing a project. Let’s consider electric vehicles. While the expansion of this market is a prospective one, it is not necessarily worth the limiting relevant costs. Firstly we must consider the costs of new technology behind this particular product. Obviously engineering would defiantly be relevant. Additionally manufacturers must consider the costs of producing this type of product in pre-existing, and fixed-sized plants. Most importantly companies looking to pursue this venture must also consider the availability of power stations for these specific vehicles, and possibly the costs of setting up their own stations. While these are just a few examples of relevant costs, they highlight the importance of managerial accounting when considering new business ventures.