ACC 406 Chapter Notes - Chapter 13: Apple Pie, Income Statement, Longrun
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Make consists of choosing alternaives with immediate/limited end in view. Some decisions that are short-run have long-run consequences. Oten small-scale acions that serve a larger purpose. Example of short-run decision: producing a component instead of buying it from suppliers. Objecive: to lower cost of making the product. Decision-making model: recognize and deine the problem, idenify alternaive soluions, idenify costs/beneits associated with each alternaive, esimate relevant costs/beneits for each alternaive, assess qualitaive factors, select alternaive with greatest net beneits. 2 characterisics: 1. they are future costs 2. they difer across alternaives. Can consist of both variable and ixed costs. Consider changes in supply and demand for resources. Past costs are never relevant, they are used to esimate future costs. (type of relevant cost) opportunity cost: the beneit sacriiced/forgone when one alternaive is chosen over another. But this cost is not an accouning cost (not noted. just used for esimaion) To accept a special order at less than the usual price.