SCM - FINAL EXAM COMPLETE QUESTIONS AND
CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+||BRAND
NEW!!
Managers - must constantly make decisions. In making these decisions,
they must estimate how each decision could affect operating income.
often select the course of action that maximizes expected operating income over
the period affected by the decision
Relevant information - is the expected future data that differ among
alternative courses of action.
relevant cost - cost that is applicable to a particular decision in the sense
that it will have a bearing on which alternative the manager selects.
Decision-making - is the process of studying and evaluating two or more
available alternatives leading to a final choice.
Avoidable cost - can be defined as a cost that can be eliminated (in whole
or in part) as a result of choosing one alternative over another in a decision-
making situation.
, All costs are considered avoidable, except:
- Sunk costs
Future costs
Relevant costs - are expected future costs which differ between the
decision alternatives
Sunk or historical costs - are never relevant in decisions because they are
not avoidable and therefore, they must be eliminated from the manager's
decision framework.
Depreciation - is irrelevant in decision only if it relates to a sunk cost.
on a new machine is relevant because the investment in the new machine has
not yet been made and therefore it does not represent depreciation of a sunk
cost.
Opportunity costs - are the profits lost by the diversion of an input factor
from one use to another.
Out-of-pocket costs - involve either an intermediate or near future cash
outlay; they are usually relevant to decisions
CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+||BRAND
NEW!!
Managers - must constantly make decisions. In making these decisions,
they must estimate how each decision could affect operating income.
often select the course of action that maximizes expected operating income over
the period affected by the decision
Relevant information - is the expected future data that differ among
alternative courses of action.
relevant cost - cost that is applicable to a particular decision in the sense
that it will have a bearing on which alternative the manager selects.
Decision-making - is the process of studying and evaluating two or more
available alternatives leading to a final choice.
Avoidable cost - can be defined as a cost that can be eliminated (in whole
or in part) as a result of choosing one alternative over another in a decision-
making situation.
, All costs are considered avoidable, except:
- Sunk costs
Future costs
Relevant costs - are expected future costs which differ between the
decision alternatives
Sunk or historical costs - are never relevant in decisions because they are
not avoidable and therefore, they must be eliminated from the manager's
decision framework.
Depreciation - is irrelevant in decision only if it relates to a sunk cost.
on a new machine is relevant because the investment in the new machine has
not yet been made and therefore it does not represent depreciation of a sunk
cost.
Opportunity costs - are the profits lost by the diversion of an input factor
from one use to another.
Out-of-pocket costs - involve either an intermediate or near future cash
outlay; they are usually relevant to decisions
