CHAP 19:
INFORMATION FOR DECISION RELEVANT COSTS AND BENEFITS
CHARACTERISTICS OF RELEVANT INFORMATION
1. Different under competing courses of action
2. Relates to the future
3. Timeliness (available in time to be used in the decision) versus
accuracy
IMPORTANCE OF PROVIDING ONLY RELEVANT
INFORMATION
1. Generating information is a costly process
(relevant data must be SOUGHT& ANALYSED)
2. Limited time
3. Effectively use only a limited amount of
information ( because experience information
overload  decision making decline)
IDENTIFYING RELEVANT COSTS AND BENIEFITS
1. SUNK COSTS
+ Carrying amount of equipment
+ Cost of inventory on hand
2. IRRELEVANT FUTURE COSTS AND BENEFITS
3. OPPORTUNITY COSTS
4. THE FOCUS ON INCREMENTAL AND AVOIDABLE
COSTS
INFORMATION FOR UNIQUE VS REPETITIVE DECISIONS
1. Cost prediction  relevant  repetitive
decisions  draw a a large amount of historical
data
2. Over and over again + regular/irregular intervals
RELEVANT INFORMATION FOR SOME COMMON
DECISIONS
1. Accept or rejected a special order
+ spare (excess/ idle) capacity
+ no spare capacity
+the significance of a one-off decision
-->special flights = regular business  should not accept
unless the price flights > direct & facility level costs
(change costs with customer)
increase capacity tha sacrifice current profitable
flights ( tăng năng suất thay vì hi sinh các chuyến bay
còn lại)