Cost Accounting

Decision Making and Relevant study Five-Step Decision-Making Process ? A decision mannikin is a formal method of making a choice, oft involving both numerical and qualitative analyses. ? Managers very much use well-nigh variation of the Five-Step Decision-Making Process. Step 1: discover randomness Step 2: Make Predictions About in store(predicate) Costs Step 3: take in An utility(a) Step 4: Implement The Decision Step 5: evaluate Performance Feedback ? Much of this chapter focuses on Choosing an alternative. ? The notion of relevance willing be largely used for this stage. The image of Relevance ? Relevant Information has two characteristics: ? It occurs in the coming(prenominal). ? It differs among the alternatives organism considered. ? Relevant Revenues (Costs). ? Expected future revenues ( addresss) that differ among the alternatives. ? If they ar non variant among alternatives, they are not relevant. ? Something happened i n the past is not relevant. ? past costs are not relevant sunk cost because they are not avoidable and cannot be changed no affaire what action is taken.

? three-figure and qualitative Relevant Information ? duodecimal factors are outcomes that are metric in numerical monetary value ? both financial ( show 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 pecker in numerical terms ? ? Relevant-cost analysis generally emphasizes quantitative factors. Relevant I nformation Illustration (Exhibit 11-2) Two ! alternatives: 1. Do not reorganize, 2. bump around Reorganize means that a) fires 5 visible handling workers (to reduce project costs) & b) leases new machine Quantitative (mainly financial) analysis. Qualitative factors ? negative effect on employee morale of lay off employees. Types of Decisions ? Special Orders (One-Time-Only) ? Make or Buy (Insourcing vs....If you involve to get a full essay, range it on our website: BestEssayCheap.com

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