0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
When a decision is made what two things is a decision maker considering?
Two things a decision maker considers when making a decision are future costs and benefits of the decision. Other things are sometimes considered when making decisions including future consequences of the decision.
Are sunk costs easy to spot and are they simply the fixed costs associated with a decision?
Sunk costs are costs that have been incurred that cannot be reversed. For example, if you owned a car and payed for repairs that were not refundable and were deciding whether or not to purchase a new car, you would not consider the repair costs in your decision because those costs have already been made and you cannot receive the money back. You would only consider the costs that you may incur in the future when making your decision whether or not to purchase another car. Sunk costs are not considered in your decision.
Costs and benefits are both subjective a calculation of the value of a decision is always what?
His or her unique values and beliefs. apex
What is marginal analysis?
A type of cost-benefit decision making that compares the extra benefits to the extra costs of an action
Because costs and benefits are both subjective a person decision will always be based on what?
his or her values and beliefs
What are the differences between relevant cost and irrelevant cost?
In decision making process those cost which are effected from the decision under consideration those costs are called relevent costs and those costs which have no impact on decision making of specific project are called irrelevent costs.
Are marginal costs relevant costs?
If marginal costs are relevant for specific situation or specific decision making scenario then marginal costs are relevant costs otherwise marginal costs can be irrelevant.
Why are historical costs irrelevant?
Historical costs are irrelevant because historical costs are sunk cost and no body can change any decision made in past so anything which can not be change due to underlying decision then that cost is irrelevant cost.
Why does the sunkness or nosunkness of a cost depend on the decision being made?
The sunkness or nosunkness of a cost depends on the decision being made because sunk costs are costs that have already been incurred and cannot be recovered. Therefore, they should not be considered in the decision-making process as they are irrelevant to the future outcome. On the other hand, nonsunk costs are costs that will be incurred if a particular decision is made and should be carefully evaluated before making the decision.
Is variable cost a relevant cost?
No. If a variable cost does not differ between alternatives than it is irrelevant.
Why depreciation on an existing asset is always irrelevant?
Depreciation is an invisible, non-cash cost and it is irrelevant when calculating the cash flow of the company which is the true indicator of whether the company is making a profit or not. Depreciation is also irrelevant because it is not truly realized until the asset is resold or scrapped at the end of its life. Recording it every year is consistent with the theory of conservatism when writing off costs. Depriciation is also irrelevant for the existing assets becoz it is fixed and fixed costs are always irrelevant unless they are incremental
Variable costs are relevant and fixed costs are irrelevant?
Generally variable costs are relevant costs but if due to any decision fixed costs are also going to affected then fixed costs are also relevant costs.
How does relevant evidence and material evidence differ?
Relevant means that the evidence provided goes toward establishing whether a person met one or more of the required elements of a crime. Irrelevant means it does no have anything to do with proving any of those elements. Often an attorney will try to get irrelevant evidence introduced for other factors, such as showing prior crimes, or getting th sympathy of the jury, which may or may not be applicable to what is being tried. * Differential/ marginal/variable/incremental costs are always relevant * Cash costs and future costs are always relevant * Past costs or sunk costs are always irrelevant * Fixed costs are always irrelevant unless they are incremental
Are fixed costs always irrelevant?
No fixed costs are not always irrelevant. Some fixed costs may differ among the alternatives and hence will be relevant. e.g. When figuring the incremental cost of the more expensive car, the relevant costs would be the purchase price of the new car (net of the resale value of the old car) and the increases in the fixed costs of insurance and automobile tax and license.
Are sunk costs ever relevant for decision-making purposes?
NO, its cost which was wasted in past we can not recover it so it is not relevant for decision making.
What can a decision- making grid do?
help you determine the oppotunit cost of your decision.
All future costs are relevant in decision making?
Future costs are relevant in decision making if the decision will affect their amounts. For example, suppose you're trying to decide whether to drive to work or take the bus. Relevant future costs information includes (1) the cost of gasoline and tolls needed to drive to and from work and (2) the cost of bus fare because both of these costs depend on your decision. However, future costs that won't change - such next month's rent on your apartment - are not relevant because, regardless of your decision, they will not change. Note that past costs are never relevant in decision making.
