Explain why classifying costs as fixed, variable, sunk or relevant is important for decision making. Highlight any limitations to utilising these classifications for decision making.
(6 marks)
Classifying costs is important as based on this we know which costs are relevant and not relevant for capital budgeting decision making. Fixed and variable are important and effects the net income while sunk costs is not relevant since it is already incurred and do not affect our decision making. Since for decision making we need the costs which affects the future prospects of business.
Explain why classifying costs as fixed, variable, sunk or relevant is important for decision making. Highlight...
Question C.1 (12 Marks) Define relevant costs. Why are historical costs irrelevant? a. b. Distinguish between quantitative and qualitative factors in decision making. Why are qualitative factors important in decision making? Sunny Inc. produces 40 000 MP3 Players each month. The market price per MP3 Player is $40. The following data is relevant to MP3 Players' production and sales in November 2018 c. Direct material costs S389 870 Direct labor costs S265 900 Variable manufacturing overhead costs S224 230 Variable...
Why is relevant range important to decision making? How can it be impacted?
In a make-or-buy decision, which costs can be considered relevant? Group of answer choices Unavoidable variable costs, incremental fixed costs, and sunk costs Incremental variable costs, unavoidable fixed costs, and opportunity costs Incremental variable costs, incremental fixed costs, and sunk costs Incremental variable costs, incremental fixed costs, and opportunity costs
Distinguish between fixed and variable costs. Explain common misapplications of costs in decision making. Employ marginal analysis to make a rational decision (define an example) Conduct a breakeven analysis to make a business decision. (define an example) The response needs to be at least 200 words
What are relevant and irrelevant costs, and how are they used in differential analysis? Why are sunk costs irrelevant when making a decision?
5. A. Explain why explicit costs and implicit costs are relevant in economic decision B. You have just been offered a job in a firm at Wall Street paying $60,000 per making. year. You decide to turn down this offer because you want to work for yourself. Explain the opportunity cost of working for yourself? C. Analyze why the marginal cost is the relevant cost to the producer when he is deciding whether to produce more of a good.
Explain why decision making is a distinct management function and why it is linked to all other management functions. Identify the three managerial decision classifications and give examples of each.
Question 1 of 1 Which of the following are relevant in short-term decision making? Select the correct answer(s). Multiple boxes may be checked if needed. Purchase price of new equipment Reduction in variable costs Additional revenue Opportunity costs Sunk costs Book value submit answer & continue
1) When making Managerial decisions, explain what financial and non-financial information is involved in the decision making process? 2) Explain the following concepts utilized in Incremental Analysis--Relevant Costs, Opportunity Costs and Sunk Costs? 3) What is the purpose of incremental analysis used by a company? 4) Why do we only look at relevant costs in accepting or rejecting a special order at a set price? What assumptions are made in this decision-making process? 5) What factors do we look at...
In the short-run, what is the difference between variable costs and fixed costs? Why are fixed costs call sunk? Why would your economics professor never ask you the question, "What is the difference between variable costs and fixed costs in the long-run?"