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?

Question

Hugo Ali

Business

2 November, 12:00

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?

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Answers (2)

Know the Answer?

Jacoby · Answer 1

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.

Kolby Mills · Answer 2

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.