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If you look at our text book, the term cost is defined as follows:

“the monetary value of the resources forgone or sacrificed in order to achieve a specific objective such as acquiring a good or service”

And, if you continue to read on you’ll find that  costs can be classified in many ways – fixed, variable, mixed, product, period, relevant are just some classifications commonly used. I recently a documentary on BBC television which portrayed the different meanings and uses of the word cost -and of relevant cost in particular. The documentary was Inside Claridge’s – Claridge’s is a up-market hotel in London. In the episode I watched, the hotel was being decorated for Christmas. The decorations inside and out were quite fabulous, and the Christmas tree was commissioned from a custom designer. The programme narrator asked the hotel manager how much the decorating cost. His reply: “How much does magic cost”. A great answer I thought. To try to convert this to management accounting speak, I would translate the answer as “That’s not a relevant cost, the decision is made”.