Cost Accounting

Decision Making and Relevant study Five-Step Decision-Making Process ? A decision mannikin is a formal method of do a choice, oft involving both duodecimal and qualitative analyses. ? Managers frequently use well-nigh variation of the Five-Step Decision-Making Process. Step 1: capture randomness Step 2: Make Predictions About prox Costs Step 3: take in An preference Step 4: Implement The Decision Step 5: evaluate Performance Feedback ? Much of this chapter focuses on Choosing an alternative. ? The design of relevance willing be largely used for this stage. The fancy 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 ( lives) that differ among the alternatives. ? If they ar non different among alternatives, they are non relevant. ? Something happened in the past is not r elevant. ? prehistorical costs are not relevant sunk cost because they are not avoidable and cannot be changed no occasion what action is taken.

? denary and qualitative Relevant Information ? decimal factors are outcomes that are metric in numerical name ? both financial ( explicit 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 legal community in numerical terms ? ? Relevant-cost analysis generally emphasizes quantitative factors. Relevant Information Illustration (Exhibit 11-2) Two alternatives: 1. Do not ! reorganize, 2. bump around Reorganize means that a) fires 5 worldly handling workers (to reduce project costs) & b) leases new machine Quantitative (mainly financial) analysis. Qualitative factors ? negative effect on employee morale of displace off employees. Types of Decisions ? Special Orders (One-Time-Only) ? Make or Buy (Insourcing vs....If you privation to get a full essay, range it on our website: OrderCustomPaper.com

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