COMM 294 Chapter Notes - Chapter 8: Sunk Costs, Contribution Margin, Heavy Competition
Document Summary
Comm294 - chapter 8 - short-term business decisions. Management accountants gather and analyze relevant info to compare alternatives and help with comparing the actual results of a decision to those originally anticipated. It is expected future data, and differs among alternatives. Costs are relevant if they affect your decision of what item to purchase (irrelevant don"t affect) Sunk costs are also irrelevant to your decision (ex. price you paid for it in the past is sunk) In all situations - only relevant data affect decisions. Layoffs can hurt the local community and employee morale. Outsourcing can reduce control over delivery time and product quality. Relent qualitative info has to be in the future and differ between alternatives. This is also called relevant information approach or the incremental analysis approach. Seven kinds of decisions: pricing, special sales orders, dropping products/departments/ territories, product mix, outsource, selling as-is/processing further, transfer-pricing decisions.
