Archive about 'Short Term Decisions'

More Simple Relevant Costs Questions Or Examples

Tweet Below are simple examples on relevant costs for readers to practice to understand relevant costs. Question No:1 ABC Ltd wishes to know the relevant cost of material X for a special contract. The contract will need 200 litres of Q. Currently in stock 150 litres Original cost of Q in stock $2 per litre […]

List Of Topics Under The Heading Short Term Decision Making

Tweet Click to the respective topic on Short Term Decision Making Content Page On SHORT TERM DECISION MAKING 1.0 Relevant Costs-Definition, Criteria and Usefulness See simple questions/examples on relevant costs 2.0 Sunk Cost In Decision Making 3.0 Costs Used in Alternative Decision making Techniques 4.0 Short Term Decision Making-Understanding Limiting Factor 5.0 Short Term Decision […]

Decision Making-Notional Costs, Sunk Costs & Committed Costs

Tweet Notional Costs Notional costs are also known as imputed cost. The primary objective of charging notional costs is to enable management to make clearer internal decisions by making sure that internal decision making become more realistic by assuming that the cost of all resources consumed reflects the full economic value – usually by applying […]

Short-Term Decision Making- Special Order (Part 3)

Tweet Sometimes, when a company has spare production capacity, it is willing to fulfill SPECIAL ORDERS for non-regular customers. Normally, the prices quoted are lower than those regular customers. So When do a Company Accept or Reject a Special Order? Generally, the rule is to accept the order as long as the incremental revenue is […]

Short Term Decision Making-Make Or Buy (Part 2)

Tweet At times, management needs to decide whether to manufacture the product or to buy the ready made from other companies. The following are some reasons to buy from other companies: REASONS TO BUY FROM OUTSIDERS Flexibility to meet urgent demand of customers; Overcome limiting factor problem ( Part 1); Concentrate on its own core […]

Short Term Decision Making-Limiting Factor (Part 1)

Tweet One part of managerial accounting is the need to understand limiting factor for short term decision. As a result of limited supply of resources constraint, a company normally cannot produces as many products as it wish. The limited supply of resources can be in many forms like limited cash, labor time, material/machine availability and […]

Costs Used For Alternative Decision-Making Techniques

Tweet The following are some other cost techniques which are useful to management’s decision makings: OPPORTUNITY COST Represents the opportunities which have been forgone by following one course of action rather than an alternative course. The opportunity cost in this case is the profit foregone by utilizing scarce resources for one particular course of action. […]

Relevant Costs: Definition, Criteria And Its Usefulness

Tweet Whether in cost or managerial accounting, we need to understand what are relevant cost, criteria or nature and the benefits or usefulness of understanding relevant costs in decision making: RELEVANT COSTS Management needs sufficient and relevant information make the correct decisions. Hence, the need to understand relevant costs. A relevant cost relates to future […]