Relevant Costs And Revenues For Decision Making

Question 1

What is involved in the Planning part of the Decision Making Process?

Answer 1

Identifying objectives
Searching for alternative course of action
Gathering data about the alternative
Select the appropriate course of action
Implementing decisions

Question 2

What is involved in the Control part of the Decision Making decision?

Answer 2

Comparing actual outcomes to the planned outcomes
Respond to divergences from plan

Question 3

What are Relevant Costs and Revenues?

Answer 3

The relevant costs and revenues are the relevant financial inputs for decision making, which are future cash flows that will differ between the various alternatives being considered.

Question 4

What are the Qualitative Factors to consider?

Answer 4

Staff redundancies
Staff morale
Impact on future output
Company being dependent on a supplier
Price increase
Not delivering on time

Question 5

What are Special Pricing Decisions?

Answer 5

Special pricing decisions are typically one-time only orders and/or orders below the prevailing market price.

Question 6

What is Outsourcing (in make or buy decisions)?

Answer 6

Outsourcing involves obtaining goods or services from outside suppliers instead of from within the organisation.

Question 7

How to come to a Discontinuation Decision?

Answer 7

Routine profitability analysis by cost objects provides attention directing information that highlights those potential unprofitable activities that require more detailed study.