unit 4 discussion account.docx - Department of Business ...

Department of Business, University of the People
BUS 5110-01: Managerial Accounting
Dr Green Gaberella
22
nd
February, 2022.

Introduction
Every business's goal is to maximize profit at all costs, and in order to do so, management must
engage in various cost activities to determine what costs are avoidable, unavoidable, and relevant
(Costs, 2022),
in order to arrive at a point where management can make a cost-effective decision
that will increase their operation's contribution margin.
The differential analysis method will have to be used in order to achieve a more suitable decision
for the growth of the business in respect to the vacuum manufacturing company that wants to
decide if the company should engage in manufacturing vacuum or purchase it, for the
management to make a candid and cost profitable decision for the company
(Costs, 2022)
.
The analysis will be illustrated below for a better understanding of the cost activities involved in
determining whether the manufacturing company should continue to manufacture the vacuum or
purchase it. Only the relevant costs will be discussed based on the analysis in order to narrow the