ACC 220 Lecture Notes - Lecture 7: Historical Cost, Income Statement, Fixed Cost
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Short-run decision making consists of choosing among alternatives with an immediate or. Also referred to as tactical decisions because they involve choosing between alternatives with an immediate or limited time frame in mind. Example: accepting a special order for less than the normal selling price to utilize idle capacity and to increase this year"s profits. Some decisions tend to be short run in nature. The decision-making model: recognize and define the problem. Identify the costs and benefits associated with each feasible option. 3: estimate the relevant costs and benefits for each option. How does time value of money impact the options: assess qualitative factors, quantitative v. qualitative. Politis, brand image, ethics, morality, long-term sustainability, competitive pressures, safety. No: make the decision by selecting the alternative with the greatest overall net benefit. Which alternative has the greatest net benefit? (or least cost) Only future costs, revenues, and consumption can be relevant.