BUS 254 Study Guide - Midterm Guide: Raw Milk, Contribution Margin, Outsourcing

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BUS 254 Full Course Notes
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BUS 254 Full Course Notes
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Study objectives: describe management"s decision-making process and the concept of incremental analysis. Management"s decision-making process: the process isn"t always the same, but we can identify some steps, 1. Identify the problem and assign responsibility: 2. Determine and evaluate the possible courses of action: 3. Make a decision: 4. review the results of the decision, these decisions consider both financial and non-financial information, financial: revenue and costs, and overall profitability, non-financial: effect of decision on employee turnover, the environment, and. Incremental analysis approach the overall image of the company: decisions that involve a choice among alternative actions. One: accept an offer at a special price. Sometimes a company can have an opportunity to get more business by making a price concession (giving a discount) If we just look at the total cost, we would think to reject the offer : but, since it"s within capacity, we don"t include fixed cost because it remains the same, so, we accept this offer.

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