Week 9 ACCY 111 RJD Lecture 5

Assuming the organisation has no spare capacity it

Info icon This preview shows pages 36–40. Sign up to view the full content.

View Full Document Right Arrow Icon
Assuming the organisation has no spare capacity: it must sacrifice part of its existing output to produce more of one product (or a new product). is the external cost more than the internal variable cost and the lost contribution from an existing product?
Image of page 36

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

View Full Document Right Arrow Icon
Qualitative Factors Qualitative factors that cannot be quantified in terms of costs and profits may also affect decisions, e.g. : what is the relationship between different products? what impact will decisions have on employee morale? how will competitors respond? is their any pending new legislation or possible regulation by national or local government?
Image of page 37
Summary: An Introduction to Decision- making Past (historical) costs may be helpful as a basis for making predictions. However, past costs themselves are always irrelevant when making decisions. Different alternatives can be compared by examining differences in expected total future revenues and costs.
Image of page 38

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

View Full Document Right Arrow Icon
Summary: An Introduction to Decision- making Not all expected future revenues and costs are relevant. Expected future revenues and costs that do not differ across alternatives are irrelevant and therefore can be eliminated from the analysis. Due weight must be given to non financial quantitative factors and qualitative factors.
Image of page 39
Next time Making investment decisions Please read chapter 11
Image of page 40
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern