Decision-making, Pricing Decisions And Cost Management

Course Contents, Concepts and Issues

Decision Making and Other Relevant Information

• Decision Models
• Five-Step Decision-Making Process
• Relevance
• Relevant Cost Illustration
• Features of Relevant Information
• Sunk Costs Are Irrelevant in Decision Making
• A Starting Point: Absorption-Based Budgeted Income Statement
• Types of Information
• Terminology
• Types of Decisions
• One-Time-Only Special Orders
• Special Order Illustration
• Make-or-Buy Illustration
• Potential Problems with Relevant-Cost Analysis
• Avoiding Potential Problems with Relevant-Cost Analysis
• Insourcing vs. Outsourcing
• Qualitative Factors
• Opportunity Costs
• Product-Mix Decisions
• Adding or Dropping Customers
• Customer Profitability Analysis, Illustrated
• Adding or Discontinuing Branches or Segments
• Adding/Closing Offices or Segments
• Equipment-Replacement Decisions
• Behavioural Implications

Pricing Decision and Cost Management

• Pricing and Business
• Influences on Demand and Supply
• Time Horizons and Pricing
• Differences Affecting Pricing: Long Run vs. Short Run
• Alternative Long-Run Pricing Approaches
• ABC Manufacturing Cost Illustration
• Product Profitability Using ABC Costing: Illustration
• Markets and Pricing
• Market-Based Approach
• Understanding the Market Environment
• Five Steps in Developing Target Prices and Target Costs
• Value Engineering
• Value Engineering Terminology
• Cost Incurrence and Locked-In Costs Graph
• Problems with Value Engineering and Target Costing
• Target Costing Illustration
• Cost-Based (Cost-Plus) Pricing
• Forms of Cost-Plus Pricing
• Common Business Practice
• Life-Cycle Product Budgeting and Costing
• Important Considerations for Life-Cycle Budgeting
• Life Cycle Budgeting, Illustrated
• Other Important Considerations in Pricing Decisions
• The Legal Dimension of Price Setting