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Unformatted text preview: o Management Accounting, 3e
Werner/Jones 7 38 LO5 Opportunity Cost Analysis
• The $200,000 opportunity cost is added to
the relevant cost of the make decision. • If they make the timers, they are unable
to make the clocks and unable to realize
the increased profits from the clock sales. ©2009 Michael Werner and Kumen Jones, Introduction to Management Accounting, 3e
Werner/Jones 7 39 LO5 Opportunity Cost Analysis
• Without the opportunity cost,
the choice is to make the timers. • With the opportunity cost,
the choice is to buy the timers. ©2009 Michael Werner and Kumen Jones, Introduction to Management Accounting, 3e
Werner/Jones 7 40 Discontinuing a Business Segment
• If a particular division, department or product line
is suffering a loss,
• Some times managers believe it is in the best
interests of the Company to shut it down.
• As we saw with the Slade Blade Company
• That may not be the best solution. 7 41 Segment Reports
Managers need information that
relates to their business segment. Reports that provide information
pertaining to a particular...
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- Spring '08