Listed below are a number of statements concerning management\'s decision-making

Question

Listed below are a number of statements concerning management's decision-making process. Identify whether each statement is correct or incorrect 1. The final step in management's decision-making process is to actually make the decision. In making business decisions, management will ordinarily only consider financial information because it's objectively determined The first step in management's decision-making process is to determine the decision alternatives 3. Relevant costing is used for short-term decision making because it focuses only on the 4.costs and benefits that are relevant to the decision at hand S. Under incremental analya is, variable costs will change under differant courses of action, but fixed costs will never change 6. Decisions involve a choice among alternative courses of action. . Whn using darferental analysis some costs will chango under aitermative courses of action, but revenues will not change.

Explanation / Answer

1) The given statement is incorrect. The final step in management's decision making process is to review the results of the decision not to actually make the decision.

2) The given statement is incorrect. Management considers both financial and non financial information in making business decisions.

3) The given statement is incorrect. The first step in management's decision making process is to identify the problem and assign responsibility.

4) The given statement is correct. Relevant costing is used for short term decision making and focus only on the costs and benefits that are relevant to the decision at hand.

5) The given statement is incorrect. Under incremental analysis, the cost is different under different courses of action, thus fixed cost also change along with variable cost.

6) The given statement is correct, decisions involve a choice among alternative courses of action.

7) The given statement is incorrect. Under differential analysis, costs and revenue both will change under alternative courses of action.

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