From the course: Accounting Foundations: Managerial Accounting
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Terms related to evaluation and decision-making
From the course: Accounting Foundations: Managerial Accounting
Terms related to evaluation and decision-making
- Managers are paid to make hard decisions as markets for particular products change based on developments in new technology, new fads and trends in consumer tastes, and increase pressure from new and existing competitors. Occasionally, the situation requires a serious look at the potential need to exit from a particular market or to drop a specific product. Sometimes these decisions are motivated by the opportunity to enter a new market or to add a new product line. For example, airlines are constantly evaluating whether to cut service on less-traveled routes or to increase or cut back the number of first class seats. The decision to drop a product line is critical because subsequently reversing the decision can be difficult or even impossible. Good management accounting can do much to facilitate the process of evaluating divisions, personnel, processes, and products. Conversely, a poor understanding of some critical management accounting concepts can lead to painful, if not…
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