Home » Major on the internet funds loan critiques » Improve The us 14164 Electronic Wade Hampton Blvd Greer, SC Lenders – MapQuest

Improve The us 14164 Electronic Wade Hampton Blvd Greer, SC Lenders – MapQuest

FIGURE 9.1 The Decision-Making Process First: Determining Strategic Points

Third: relevant cost analysis and strategic cost analysis Identification and collection of relevant information

Forecast of future values ​​of relevant costs and revenues Fourth: selection and implementation of the best plan of action

Relevant cost analysis Relevant cost information Relevant costs are those costs that will be incurred at some point in the future; they differ according to each option available to the decision maker.

LEARNING OBJECTIVE 1 Define the decision-making process and identify the types of cost information relevant to decision-making.

The costs relevant to a decision are costs that could influence the choice between the options available for that decision. Costs that were incurred in the past or that are already allocated in the future are not relevant; they are “sunk costs” because they will not change, whatever option is chosen. The same is true for costs that have not been incurred but will remain the same regardless of which option is chosen: they are not relevant. Indeed, for a cost to be relevant it must be a cost that will be carried out in the future and modified according to the options available to the decision maker. For example, consider the decision to buy a new car. The cost of acquiring the new car is relevant; the price paid for the current car is not: it is no longer possible to exchange it. Similarly, the cost of membership in a motorist association is not relevant, as it does not change regardless of the car you choose to buy. And the same applies for any permits and fees that do not change with the car that is chosen. Suppose further that your choice has been narrowed down to just two vehicles, of which the dealer for one is located some distance away, while the dealer for the other is nearby. The costs of the trip to each distributor are not relevant; they “sink” the instant the decision is made (see figure 9.2). A relevant cost can be variable or fixed. Variable costs are generally relevant for decision making because they differ depending on each option, and they have not been assigned.

Leave a Reply

Your email address will not be published. Required fields are marked *