Monday, October 7, 2019

Doesn't matter Essay Example | Topics and Well Written Essays - 750 words

Doesn't matter - Essay Example As an accounting manager, only those costs and revenues should be considered that are altered as a result of the decision. Incremental costs and revenues get the prime importance in this decision-making tree. Cost is one of the most crucial factors of accounting when it comes to decision-making. "Cost behavior patterns" refers to the way in which cost behaves in connection with the level of activity. For instance in a project there are fixed costs and variable costs. Some costs increase as the project progresses while others remain fixed. Determining the minimum price quotations is crucial. This will help the company decide whether they should hire new technicians or not. It is not a final key in the decision-making. But this will give the managers the absolute minimum price. Beyond this, they can decide if they want to increase the sale price. The manager also needs to think in terms of overhead absorption. Dividing the total cost of technicians by the number of animals will give a cost per animal. This only gives a rough idea of the real cost of servicing each animal. As an accounting manager, it would be crucial to see what this extra work shift will mean in terms of cost/profit. A comparison of the profit statement when 12,000 test capacity is performed, with the profit statement when the additional shift of 18,000 tests is carried out, would be essential to judge the difference in terms of profit. There are certain factors that need to be included in case a decision is made regarding the additional workload of 18,000 tests. The greater the number of factors the more complicated the decision-making process. The presence of many options available for the company makes it difficult for accounting managers to ration and quantify the benefits across the board. The first factor to consider is whether the decision of taking on more technicians

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