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Horngren's Financial & Managerial Accounting, The Managerial Chapters 6th Edition

Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)

Book Edition6th Edition
Author(s)Miller-Nobles, Mattison, Matsumura
ISBN9780134486857
PublisherPearson Higher Education
SubjectAccounting
How is Relevant Information used to make Short-Term Decisions?
How does Pricing Affect Short-Term Decisions?
How do Managers Decide which Products to Produce and Sell?
How do Managers make Outsorcing and Processing Futher Decisions?

Chapter 25, How is Relevant Information used to make Short-Term Decisions?, Try It!, Exercise 1–6

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Here are some tips:

1

A decision-maker has to analyze both qualitative and quantitative information for decision making. 

2

It is essential to categorize information as relevant and irrelevant for efficient decision making.

Explanation

Financial
1
2
3
4
5

Financial factors are factors that are quantifiable or can be expressed in terms of money.

Nonfinancial
6

Nonfinancial factors are factors that cannot be expressed in money or are not quantifiable.

Relevant
2
3
4
5
6

Relevant costs are avoidable costs that are incurred only when making specific business decisions.

Irrelevant
1

An irrelevant cost is a cost that will not change as the result of a management decision.

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