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Chapter_13_Summary_of_S-T_decisions - 4 Evaluating a...

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Chapter 13 – Relevant Cost for Decision Making Key factors for Decision Types 1. Relevant Cost/Benefits vs. Total Income Statement 2. Make or Buy Decisions – Compare cost of making to cost of buying (include opportunity costs in relevant costs and revenue calculations). 3. Dropping or Retaining a Segment – calculate lost revenues and avoidable costs (consider segment margin).
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Unformatted text preview: 4. Evaluating a Special Order – determine incremental revenues and costs (consider opportunity costs if affected by capacity). 5. Sell or Process Further – determine incremental revenues and costs of processing further. 6. Optimal Use of Limited (constrained) Resources – key is to determine margin (income) per unit of constrained resource....
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