4:21PM Tue Dec 13AA online.hiram.edu & 2ACCT XXXXXXXXXXFall 2022: Wri... a Writing Assignment 2.docx...

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4:21PM Tue Dec 13AA online.hiram.edu & 2ACCT XXXXXXXXXXFall 2022: Wri... a Writing Assignment 2.docx Course: ACCT XXXXXXXXXXFall XXXXXXXXXXSign In | Connect | McGraw Hill Writing Assignment #2:Your firm recently received a “Request for Proposal” from theController of Future Equipment Manufacturing Company, JohnMills. They need help with a number of alternative decisions.They are planning on meeting with a number of firms to discussthis project. However, in order to reduce the number of firmsthey have to meet with, they would like all of the firms to submita letter addressing the following:* The concept of relevant cost* Decisions where relevant cost analysis might be usedeffectively, along with a description of each type ofdecision. It might be helpful to use examples in youdescription.* A description of non-financial factors that might alsoneed to be considered in making a decision regardingalternative courses of action.The managing partner of your firm, Jason Holloway, has askedyou to put together the letter. The letter should be addressed toJohn Mills at Future Equipment Manufacturing Company andshould be around 2 pages, single spaced. This assignment muste in the form of a letter. Use the Client Letter Example andTips for Effective Business Writing in the course resourcessection of Moodle. The Effective Writing Ruic for thisassignment can be found in the course resources section ofMoodle as well.

Rochak · Accepted Answer

John Mill
Future Equipment Manufacturing Company
December 14th 2022
Jason Holloway
Equipment Manufacturer
Proposal for alternative decisions
Dear Mr John Mills
We are pleased to receive the ‘Request for Proposal’ from you, for the help you need with several alternative decisions. As part of the same proposal, we are sending you this letter which will tell you everything about the relevant cost.
Description
Relevant costs are all the costs which are relevant to make a decision. When we see the definition of the relevant cost it can be concluded that all the costs are relevant, but not all costs are relevant as some costs are incurred even if you do not want to therefore they become irrelevant (Dillon and Nash 1978).
The meaning of relevant in the financial world is that ‘any decision that can change the flow of cash either negatively or positively’ is relevant.
The changes in cash flow can be of the following types:
· Increase in the amount paid to the suppliers, creditors or more
· Decrease in the amount paid to the people linked to the firm
· An increase in revenue is earned by the firm
· Decrease in revenue that will be earned by the. Firm
There are many other situations where the cash flow can change.
Where relevant cost is effective
Relevant costs can be effective in making most of the decisions for a firm, but there are many situations/scenarios where costs are not relevant at all, these are:
· Sunk costs: Sunk costs are the money that is already spent and there is no way to recover that back even if the decision is changed. This cost will not be affected if the decision is changed
· Fixed Costs: Another cost which is not relevant is the appointment of the fixed costs which were part of the company previously.

4:21PM Tue Dec 13 AA online.hiram.edu & 2 ACCT XXXXXXXXXXFall 2022: Wri... a Writing Assignment 2.docx Course: ACCT XXXXXXXXXXFall XXXXXXXXXXSign In | Connect | McGraw Hill Writing Assignment...

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