(BQ) Chapter 4: Fundamentals of cost analysis for decision making. Now that you are comfortable with CVP analysis and the impact of fixed versus variable costs, we can extend the concepts and apply the theories to a multitude of business conditions. | © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Fundamentals of Cost Accounting, 4th edition Lanen/Anderson/Maher Fundamentals of Cost Analysis for Decision Making Chapter 4 Chapter 4: Fundamentals of Cost Analysis for Decision Making Now that you are comfortable with CVP analysis and the impact of fixed versus variable costs, we can extend the concepts and apply the theories to a multitude of business conditions. Learning Objectives LO 4-1 Use differential analysis to analyze decisions. LO 4-2 Understand how to apply differential analysis to pricing decisions. LO 4-3 Understand several approaches for establishing prices based on costs for long-run pricing decisions. LO 4-4 Understand how to apply differential analysis to production decisions. LO 4-5 Understand the theory of constraints. After you finish this chapter you should be able to understand and use differential analysis. Understand several approaches for establishing prices and the theory of constraints. This chapter begins by discussing differential analysis and then presents conditions that are conducive to the model. Most of us use differential analysis on a daily basis without even knowing we are implementing a management tool! Differential Analysis LO 4-1 Use differential analysis to analyze decisions. Differential Analysis The process of estimating revenues and costs of alternative actions available to decision makers and of comparing these estimates to the status quo Short Run The period of time over which capacity will be unchanged, usually one year LO 4-1 Now that you see the value of CVP analysis for decision-making, let’s move on to other decisions. In Chapter 1 we discussed differential costs and differential revenues. Today, every decision that a manager makes . | © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Fundamentals of Cost Accounting, 4th edition Lanen/Anderson/Maher Fundamentals of Cost Analysis for Decision Making Chapter 4 Chapter 4: Fundamentals of Cost Analysis for Decision Making Now that you are comfortable with CVP analysis and the impact of fixed versus variable costs, we can extend the concepts and apply the theories to a multitude of business conditions. Learning Objectives LO 4-1 Use differential analysis to analyze decisions. LO 4-2 Understand how to apply differential analysis to pricing decisions. LO 4-3 Understand several approaches for establishing prices based on costs for long-run pricing decisions. LO 4-4 Understand how to apply differential analysis to production decisions. LO 4-5 .
