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Relevant- Revenue and Relevant -Cost Analysis of Adding a Customer
- Relevant costs and Relevant Revenues
Relevant refers that one consider future expenses and revenue. Relevant also refers that to a revenue or cost that will alter depending on the decision one makes.
Relevant revenues and relevant costs have a great impact on the profit. One should pay the most attention to such numbers. Getting these calculations correct can yield more profits.
- Relevant revenues
Relevant revenue refers to any revenues, which can modify if a decision is applied. Any revenue, which will remain constant, is immaterial and should be ignored in estimating a course of any action.
- Relevant Costs
Relevant cost refers to that costs which will modify if the verdict is implemented. The cost that remains unchanged should not be a factor in the decision of the firm.
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- Analysis of adding a customer
Adding a customer into the operation of the business affects its relevant costs and revenues. The business aims at attaining customers’ profitability from serving the customer. Therefore, if there an additional customer added, the business will have positive impact on the revenues.
On the other hand, the relevant costs of manufacturing and trading that particular service or good will increase.
Thus, this analysis shows the great impact an additional customer has on the businesses. With every additional customer in the business, it has to incur some costs. Moreover, it will also earn profits.
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