Lecture Management accounting: An Australian perspective - Chapter 18 introduce the information for tactical decisions. This chapter include objectives: The management accountant's role in decision making, determining relevant information, information for decisions. | Chapter 18 Information for tactical decisions The management accountant’s role in decision making To provide relevant information to managers and team who make the decisions Types of decisions Accept or reject a special offer Make or buy (or outsource) a product or service Add or delete a product, service or department Joint products: sell or process further Tactical versus long-term decisions Tactical decisions Do not require significant or permanent resource commitments Can be revered if better opportunities arise Long-term decisions Tend to be more strategic in nature May involve changes in capacity More difficult to reverse and effects may extend over longer time periods A model of the decision-making process Clarify the problem Identify alternative courses of action Collect relevant cost and benefits Compare the cost and benefits of each possible course of action Select a course of action Determining relevant information Relevant information Differs under . | Chapter 18 Information for tactical decisions The management accountant’s role in decision making To provide relevant information to managers and team who make the decisions Types of decisions Accept or reject a special offer Make or buy (or outsource) a product or service Add or delete a product, service or department Joint products: sell or process further Tactical versus long-term decisions Tactical decisions Do not require significant or permanent resource commitments Can be revered if better opportunities arise Long-term decisions Tend to be more strategic in nature May involve changes in capacity More difficult to reverse and effects may extend over longer time periods A model of the decision-making process Clarify the problem Identify alternative courses of action Collect relevant cost and benefits Compare the cost and benefits of each possible course of action Select a course of action Determining relevant information Relevant information Differs under competing courses of action Relate to the future Is timely Can be qualitative or quantitative Characteristics of relevant information Different under competing courses of action Opportunity costs may be relevant The potential benefit given up when one alternative is chosen over another Relates to the future Sunk costs are ignored Costs that have already been incurred and are irrelevant to any future decisions Prediction of future costs may be based on past data continued Characteristics of relevant information Timeliness versus accuracy Timelines I information available in time to be used in the decision-making process As accuracy increases timeliness may decrease Quantitative or qualitative Quantitative information can be expressed in numeric terms, such as dollars Qualitative information cannot be expressed easily in numerical terms Providing only relevant information Generating information is a costly process Supplying irrelevant data can result in a waste of managerial .
