AC 212 Study Guide - Quiz Guide: Contribution Margin, Outsourcing, Opportunity Cost
Document Summary
How managers make decisions: follow up. Management accountants help with this: define business goals, implement decisions, identify alternative course of action, choose best alternative, gather and analyze relevant information. All of the feedback helps management with similar decisions in the future and helps them be able to adjust current operations if it is needed. Relevant costs: incurred in the future, differ between alternatives, (costs cannot be incurred in the past if they are to be considered relevant for decision making. Irrelevant costs: do not affect a decision, do not differ between alternatives. Sunk cost: costs that were incurred in the past and cannot be changed regardless of which future action is taken. Nonfinancial or qualitative factors that play a role in a managers decision: closing manufacturing plant seriously hurt the local community, laying off employees impact on morale, outsourcing reduce control over devilry time and product quality.