Chapter13 Review

Chapter13 Review - Chapter 13 Short Run Decision Making:...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 13 – Short Run Decision Making: Relevant Costing Decision-Making Model - 1. Recognize and define the problem 2. Identify the alternatives as possible solutions to the problem; eliminate alternatives that are clearly not feasible. 3. Identify the costs and benefits associated with each feasible alternative 4. Total the relevant costs and benefits for each alternative Relevant costs are future costs that differ across alternatives 5. Assess the qualitative factors 6. Select alternative with the greatest benefit Relevant Costs - future costs that differ across alternatives Can consist of both variable and fixed cost Make-or-Buy Decisions Decisions involving a choice between internal and external production Fixed overhead costs may or may not be relevant 1. Alternatives: Make the component in-house, or Purchase the component from an outside supplier 2. Relevant costs: a. Producing in-house Direct Materials Direct Labor Variable Overhead May or May not be Fixed Cost – Is it avoidable? b. Purchasing the component externally Purchase price Special Order Decisions Focus on whether a specially priced order should be accepted or rejected Orders can be attractive - Especially when firm is operating below maximum productive capacity
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/29/2011 for the course ACC 2362 taught by Professor Thoede during the Fall '07 term at Texas State.

Page1 / 3

Chapter13 Review - Chapter 13 Short Run Decision Making:...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online