Cost Accounting

Decision Making and Relevant study Five-Step Decision-Making Process ? A decision mannikin is a formal method of fashioning a choice, oft involving both valued and qualitative analyses. ? Managers ofttimes use well-nigh variation of the Five-Step Decision-Making Process. Step 1: take in randomness Step 2: Make Predictions About approaching Costs Step 3: take in An substitute(a) Step 4: Implement The Decision Step 5: evaluate Performance Feedback ? Much of this chapter focuses on Choosing an alternative. ? The apprehension of relevance willing be largely used for this stage. The creation of Relevance ? Relevant Information has two characteristics: ? It occurs in the coming(prenominal). ? It differs among the alternatives world considered. ? Relevant Revenues (Costs). ? Expected future revenues ( hails) that differ among the alternatives. ? If they ar non contrary among alternatives, they are not relevant. ? Something happened in the past is not relevant. ? ult costs are not relevant sunk cost because they are not avoidable and cannot be changed no librate what action is taken.

? numerical and qualitative Relevant Information ? denary factors are outcomes that are metric in numerical price ? both financial ( verbalized in monetary terms) and non-financial (not expressed in monetary terms, but can be heedful numerically). Employee morale ? Qualitative factors are outcomes that are difficult to amount of money in numerical terms ? ? Relevant-cost analysis generally emphasizes quantitative factors. Relevant Info rmation Illustration (Exhibit 11-2) Two alt! ernatives: 1. Do not reorganize, 2. bump around Reorganize means that a) fires 5 real(a) handling workers (to reduce project costs) & b) leases new machine Quantitative (mainly financial) analysis. Qualitative factors ? negative effect on employee morale of move off employees. Types of Decisions ? Special Orders (One-Time-Only) ? Make or Buy (Insourcing vs....If you unavoidableness to get a full essay, range it on our website: BestEssayCheap.com

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