Differential Cost Definition:

Any cost that differs between alternatives in a decision-making situation. In managerial accounting, this term is synonymous with avoidable cost and relevant cost. Also see Incremental cost.

Example: Cost of first alternative = 5000; Cost of second alternative = 4000; Differential cost = 5000 – 4000 = 1000

 

Dear visitor! Do you like this article? If you like, then please bookmark this page and also share with your friends. Thank you for your support.   [Report Errors and Omissions]

Back to Home Page | Back to Managerial Accounting Terms Main Page