Ch07 adj Werner Jones Mgt Acctg PP97 2003

If they make the timers they are unable if to make

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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 the relevant cost of the make decision. • If they make the timers, they are unable If 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, Without the choice is to make the timers. • With the opportunity cost, With 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 If is suffering a loss, is • Some times managers believe it is in the best Some interests of the Company to shut it down. interests • 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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