COST ACCOUNTING
INFORMATION FOR DECISION MAKING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The impact of employees’ morale because of additional working hours on weekends required
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The additional payroll taxes to be paid
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Additional hours of the owner’s time to be spent in the store
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All of the above are considered qualitative factors
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Detailed explanation-1: -In order to meet the criteria for relevancy, a cost must have two criteria that include they affect the future and they differ among alternatives. Other group of theorists asserted that the relevant costs are applicable to decision. Costs are relevant, if they direct the executive towards the decision.
Detailed explanation-2: -Examples of long-term decisions include replacing manufacturing equipment, building a new factory, or deciding to eliminate a product line.
Detailed explanation-3: -For example, a business may have to decide whether to make components itself or buy them in; whether to accept or reject an order; whether to further process a product or sell it at its split‑off point; or how to best use resources when one or more of them becomes scarce.
Detailed explanation-4: -Short-term decisions are typically operational in nature: making versus buying a component of a product, using scarce resources, selling a product as-is or processing it further into a different product.