Chapter 16 Comments 8th ed

Chapter 16 Comments 8th ed - Instructor Comments Chapter...

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Instructor Comments Chapter Sixteen Finally, we come to the last chapter!!! (and one that I hope is easier for you). In this chapter, we focus on how cost analysis can be used in the decision-making process. As a starting point, make sure you understand the different cost classifications: differential cost allocated cost sunk cost, and opportunity cost. Note the definition of relevant costs (bottom of page 619). You should clearly understand the sell or process further decision , the special pricing decision , the make or buy decision , the target costing question , and the decision to continue or discontinue a segment. These decisions use the same type of reasoning – i.e., “which costs are relevant to the particular decision. In the long run, revenues must be sufficient to cover all costs in order for a business to survive. (and hopefully, to generate a profit). However, in the short run, frequently decisions should be based on whether the additional revenues exceed the additional costs . For example, several years ago Murray State University asked for bids on the university audit. The low bid was $65,000 -
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This note was uploaded on 04/23/2011 for the course ACC 490 taught by Professor Johnthompson during the Spring '10 term at Murray State KY.

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Chapter 16 Comments 8th ed - Instructor Comments Chapter...

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