Acct 2101 Test 2 Questions with accurate answers, graded A+

Acct 2101 Test 2 Questions with accurate answers, graded A+ Five Steps in the Decision Making Process--1. Identify the decision problem (issues) 2. Determine the decision alternatives 3. Evaluate the costs and benefits of the alternatives 4. Make the decision 5. Review the results of the decision One point for identify the decision problem--the problem, NOT the system One point for evaluate the costs and benefits of the alternatives--select alternatives where the benefits outweigh the cost One point for review the results of the decision--Evaluate the decision after you've implemented it decisions involve a choice among alternative courses of action--incremental analysis Two steps for incremental analysis--1. Identity the decision alternatives 2. Identify the probable effects of those decisions on future earnings (cost – benefit) Why is identifying the decision alternatives a critical step?--If left off in the initial stage, you won't look at it later. Qualitative issues must always...--be considered in any decision able to impact the decision at hand--relevant data Just because it's relevant for one decision...--doesn't mean it's relevant for another Two points for relevant data--1. costs and revenues that occur in the future 2. differ across alternatives should be the only factors to be considered costs that have already been incurred and will not change or be avoided by any future decision (never relevant)--sunk costs the foregone benefit (lost opportunity) that occurs from choosing one alternative over another.--Opportunity costs What is the opportunity cost associated with?--the choice that you DO NOT select a measure of the limit placed on a specific resource--capacity unused part of the resource; More than enough ability to satisfy additional demand of the resource--Idle (excess) Why would you have idle capacity?--If you made those units, you couldn't sell them, so you don't make them. the limit on more or more resource has been reached and doing one thing means giving up the opportunity to do something else--Full Capacity is usually easier to see on a...--progression line total number of units you can make--capacity the difference between full and normal (full – normal)--excess or "idle" capacity determined by each individual business; level at which we can usually operate because we can sell that number of units--normal capacity max units that can be made--full capacity Four types of decisions--Special Order or Accept Order at a special price Make or Buy Keep or Drop Sell or Process Further one time decision only; not a regular customer; no repeating--special order or Accept order at a special (reduced) price What do you have to do with an order at a reduced price?--Make it clear that if they continue, they don't get the lower price