Ch 6: Financial Data for Strategic Decision Making

About This Chapter

Use this chapter to learn about the process of reviewing financial data for strategic decision-making. Each of the lessons in this chapter go over examples, financial formulas, vocabulary words, and related concepts to help you better understand the decision-making process and improve your grades in class.

Financial Data for Strategic Decision Making - Chapter Summary

A full range of factors can affect the decision-making process, so you must have an understanding of these factors to make the best decisions for your organization. This chapter introduces you to how financial data can be used to influence the strategic decision-making process. Our instructors use several of these lessons to show you important accounting concepts, such as determining costs, related formulas, and financial analysis reports. The lessons also go over the vocabulary words and definitions you will need to become familiar with to understand these business concepts. At the close of the chapter, you will be ready to:

  • Assess how to make business decisions through the use of accounting concepts
  • Measure examples of sunk costs
  • Classify examples of opportunity cost and go over related calculations
  • Summarize how decision-making can be affected by differential and implicit costs
  • Generalize how producers deal with variable costs and fixed costs
  • Show relative examples of mixed costs
  • Determine the purpose of incremental analysis
  • Establish how to determine relevant costs with accepting orders
  • Evaluate how make-or-buy decisions can be impacted by relevant costs
  • Differentiate how to determine relevant costs for eliminating, replacing, and selling products
  • Compare the total costs and average cost of short-run production decisions
  • Outline the regression analysis process used in business

8 Lessons in Chapter 6: Financial Data for Strategic Decision Making
Test your knowledge with a 30-question chapter practice test
Using Accounting Concepts to Make Business Decisions

1. Using Accounting Concepts to Make Business Decisions

There are several accounting concepts that make up the generally accepted accounting principles (GAAP). Using these principles, managers are better able to read and understand financial statements needed to make business decisions.

Sunk Costs: Definition & Examples

2. Sunk Costs: Definition & Examples

In this lesson, sunk costs are defined and evaluated in the context of company decision making. Concepts are illustrated with examples from the construction industry and a small messenger business.

Opportunity Cost: Definition, Calculations & Examples

3. Opportunity Cost: Definition, Calculations & Examples

This lesson discusses opportunity costs, a central idea of economics. In addition to examining the general idea of opportunity costs, it also looks at the role of explicit and implicit costs to firms.

Differential Cost in Managerial Decision Making

4. Differential Cost in Managerial Decision Making

Differential cost calculations are an important part of how managers make the best decisions for their businesses. In this lesson, we'll see how it's used and learn how to a find differential cost.

Implicit Costs: Definition & Examples

5. Implicit Costs: Definition & Examples

Not all of the costs a business must consider can be calculated and tracked on a monthly basis. This lesson introduces the concept of implicit costs, including examples and how they differ from explicit costs.

Identifying Fixed Costs & Variable Costs for Producers

6. Identifying Fixed Costs & Variable Costs for Producers

Ever wonder why the price of brand-name drugs is so much more than generics? Or why all tablet prices seem to congregate at about the same level? This lesson explains those and other mysteries through the lenses of variable and fixed costs.

Mixed Costs: Definition & Examples

7. Mixed Costs: Definition & Examples

In this lesson, we'll look at mixed costs. We'll define variable costs and fixed costs, and we'll look at how the two are related to mixed costs. Afterward, you can test your knowledge with a brief quiz.

Incremental Analysis: Definition & Examples

8. Incremental Analysis: Definition & Examples

Companies often have to make decisions based on vast amounts of data. Incremental analysis allows them to focus on the important information only. In this lesson, we'll learn how to use incremental analysis.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Support