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ACC 410 (34)
Chapter 4

Chapter 4

8 Pages

Course Code
ACC 410
Maurizio Di Maio

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Chapter 4: Relevant Costs for Non-Routine Operating Decisions Non-routine Operating Decisions Routine operating decisions are made on a regular schedule For example, budgeting is often done once a year, product prices are reviewed and set regularly, and ongoing purchases of raw materials and other resources are commonly made These types of decisions arise because we want to improve processes or because resource shortages occur or a customer wants special treatment The following decisions are non-routine yet occur frequently in many organizations: o Commit resources or making additional investment for a special order o Internal resources or to outsource some activities o Discontinue a product line or business subunit or segment o Manage limited resources Identify the Type of Decision Managers Must Make We address problems more correctly and efficiently when we clarify the type of problem before jumping into an analysis For example, if you need to make a decision about whether to buy a new car or keep the one you own, some costs are not relevant to the decision, such as parking fees at the university Identify and Apply Relevant Quantitative Analysis Techniques Quantitative information: is numerical information that is available for addressing a problem To be relevant, cash flows must 1) arise in the future and 2) vary with the action taken www.notesolution.com
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