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Ch 14: Cost Accounting for Decision Making

About This Chapter

With this chapter, become acquainted with the process of cost accounting for decision making. You can use the lessons in this chapter to supplement and expand upon the information covered in your textbooks, gain professional skills, or improve your grade in a course.

Cost Accounting for Decision Making - Chapter Summary

There are a wide range of formulas that accounting and financial professionals can use to determine how much it will cost to complete or forgo certain tasks. This type of forecasting is used to help organizations make financially sound decisions, and in this chapter you'll discover how cost accounting influences the decision making process.

Our instructors have designed this chapter for both beginners and more skilled learners. Beginners may need to go through every lesson in the chapter to truly get a grasp on cost accounting. Individuals who have more accounting experience may use the lessons to brush up on particular topics. Those who master all of the information in this chapter will be able to:

  • Describe how an organization's mission can be influenced by cost accounting
  • Identify techniques for making business decisions by using accounting concepts
  • Define the steps for calculating costs and making decisions
  • Examine cost accounting practices and how they impact pricing decisions
  • Explain variable costing vs. absorption
  • Point out examples of differential costs
  • Appraise the impact of uncertainty, risk, and certainty on decision-making
  • Summarize how Southwest Airlines used cost accounting for making decisions

8 Lessons in Chapter 14: Cost Accounting for Decision Making
Test your knowledge with a 30-question chapter practice test
The Impact of Cost Accounting on an Organization's Mission

1. The Impact of Cost Accounting on an Organization's Mission

Cost accounting helps companies determine product pricing and reach long-term goals. Discover the impact of cost accounting on an organization's mission with an example from EasyCall, a phone company aiming to enter a new market.

Using Accounting Concepts to Make Business Decisions

2. Using Accounting Concepts to Make Business Decisions

Businesses sometimes use generally accepted accounting concepts to make business decisions. In this lesson, explore the details of the generally accepted accounting principles, or GAAP.

How to Determine Costs & Make Decisions

3. How to Determine Costs & Make Decisions

Determining the costs in a business and making a decision based on the information that has been collected is how managers look after the financial well-being of their businesses. Learn about making decisions, determining the costs of product lines, special orders, and more.

Cost Accounting Practices for Pricing Decisions

4. Cost Accounting Practices for Pricing Decisions

Cost accounting directly influences pricing decisions by including various types of costs. See how inventory, fixed, and variable costs are considered when implementing a pricing strategy and adjusting to changes in sales volume.

Managerial Decision Making: Absorption vs. Variable Costing

5. Managerial Decision Making: Absorption vs. Variable Costing

Managers make decisions about setting prices using absorption and variable costing. Learn more about the different types of costing and explore a comparison of variable costing versus absorption costing.

Differential Cost in Managerial Decision Making

6. Differential Cost in Managerial Decision Making

Differential cost compares two procedures or plans to identify their difference in cost. See how differential cost occurs and is used to guide managerial decisions through an example.

Decision Making for Managers: Certainty, Risk & Uncertainty

7. Decision Making for Managers: Certainty, Risk & Uncertainty

For each situation, managers research all possible variables and weigh the certainty and uncertainty of all possible risks to make the best decisions. Explore the strategies of decision-making for managers and learn how managers weigh risk.

Cost Accounting Case Study: Decision Making at Southwest Airlines

8. Cost Accounting Case Study: Decision Making at Southwest Airlines

Cost accounting assesses various types of costs and informs business strategy. Using a real-world case study, examine the significance of cost accounting on the overall business decisions of a well-known company.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
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Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
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More Exams
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