STEPS IN DECISION MAKING

STEP 1 Identify the objective of the decision

STEP 2 Identify the alternative courses of action
STEP 3 Gather information and perform a differential analysis
STEP 4 Make decision
STEP 5 Review, analyze, and assess the results of the decision

Key concepts
The three cost concepst commonly used in applying the cost-plus approach to product are: THE PRODUCT COST, T
Target costing combines market-based methods with a cost-reduction emphasis.

The relative profitability of a product in a bottleneck production environment is determined by dividing the unit
e: THE PRODUCT COST, TOTAL COST, AND VARIABLE COST

ned by dividing the unit contribution margin by the bottleneck hours per unit