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Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
Decision making
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Decision making

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  • 1. decision making
  • 2. decision making- process defining the problem identifying alternatives determine relevant cost & revenue data evaluating the data considering non cost factors making decision
  • 3. Special costs for decision makingrelevant costs & irrelevant costssunk costsdifferential costsmarginal costsimputed costsopportunity costsreplacement costsout of pocket costsfuture costsconversion cost
  • 4. special decision making areasselling price decisionsmake or buy decisionssales mix decisionselecting suitable method of productionplant shut down decisions
  • 5. special decision making areasselling price decisions •Competition & depression •Additional orders •Utilizing spare capacity •Export market
  • 6. Selling at or below marginal cost•to popularize new product•eliminate competitors•dispose perishables•earning foreign Exchange•to keep pm in operation•prevent future loss of Orders•helping other products making profits•Keeping employees Occupied
  • 7. pricing in competition & depression•may be priced below total cost•under marginal costing it may be above mc•production may continue•for a short term only
  • 8. additional orders exploring foreign markets•under utilized capacity•order below total cost but above mc•export sales may result in additional costs•additional cost be deducted from profits•subsidy exemptions be deducted from cost
  • 9. make or buy decisions Other factors Plant capacity Mc + loss of contribution•Outside price compared of displaced works with marginal cost•Outside if mc>op Non cost factors•Inside if mc<op Assurance of quality Assurance of continuity Assurance of maintaining price
  • 10. sales mix decisionsproportion in which various products are produced or soldSelecting most profitable mix
  • 11. Selection of a suitable method of productionnew productwhether to go for machine or hand labourordinary or automatic machineselect -which gives largest contribution
  • 12. plant shut down- not sufficient business temporary suspension permanent suspension
  • 13. differential cost is the difference in cost between two alternatives
  • 14. Incremental revenue is the difference in revenue between two alternatives
  • 15. -application•determining optimum level of production•accepting a special order•adding or dropping a product•evaluating make or buy alternatives•Introducing an additional shift
  • 16. -application•determining optimum level of production
  • 17. -application•accepting a special order
  • 18. -application•adding or dropping a product
  • 19. -application•evaluating make or buy alternatives
  • 20. -application •Introducing an additional shiftCapacity units of VC FC TC DIFF SALESIncremental outputs Rs Rs Rs Rs RsRevenue 60% 60000 9000 40000 49000 540000 --- 70% 70000 10500 40000 50500 1500 56000 2000 80% 80000 12000 40000 52000 1500 60000 4000 90% 90000 13500 40000 53500 1500 60300 300 100% 100000 15000 40000 55000 1500 61000 700
  • 21. ATTENTION COMMERCE STUDENTSACCOUNTING(FINANACIAL & COST) OFICMAP STAGE 1,2,3,4 (NEW CLASSES)CA..MODULE B,C,DPIPFA (FOUNDATION,INTERMEDIATE,FINAL)ACCA-F1,F2,F3BBA,MBAB.COM(FRESH),M.COMMA-ECONOMICS..O/A LEVELSKHALID AZIZ…..0322-3385752cost-accountants@yahoogroups.com

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