Question

High Roller Inc. is trying to decide whether to buy a private jet or to lease one. The finder's fee is incurred only if the private jet is bought. The finder's fee is what type of cost for this decision?

Answer 1

Answer:

relevant

Explanation:

Based on the scenario it can be said that the finder's fee would be considered to be a relevant cost for this decision. This type of cost refers to costs that can be avoided but are instead incurred as a consequence to a specific business decision. Which seeing as the fee in this scenario is only incurred if the company decides to buy instead of leasing then it is a relevant cost.

Answer 2

Answer:

The finders fee charged on High Roller Inc is a Relevant Cost for decision making/

Explanation:

Relevant costs for decision making  are expenditure which will be incurred as a result of making a decision. Any costs which would be incurred whether or not the decision is made is relevant to the decision.

The relevant cost concept is extremely useful for eliminating extraneous information from a particular decision-making process.

Also, by eliminating irrelevant costs from a decision, management is prevented from focusing on information that might otherwise incorrectly affect its decision.