Control Decisions
Decisions related to motivating, motivating, monitorying, and evaluating performance
Decision
Chossing an option from a sset of options to achieve a goal
Decision framework
A four-step process that consists of
specifying the decision goals, identifying available op- tions, evaluating these options, and then selecting the option that best meets the decision maker's goals.
Financial accounting
Accounting information system that aims to meet the needs of decision makers outside the organization.
Goals .
Objectives that decision makers try to achieve.
Managerial accounting
Accounting information system that aims to meet the needs of decision makers inside
an organization.
Opportunity cost .
The value of the next-best option."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>
Organization"
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
The value of the next-best option."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Organization chart
A graphical representation of the
hierarchical relations among positions in an
organization."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Planning decisions
Decisions about acquiring and us-
ing resources to deliver products and services to
customers."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Shareholder value
The long-run expected wealth poten-
tial of an organization to its shareholders."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Treasurer
The person in an organization who manages cash flows and serves as the contact point for banks,
bondholders, and other creditors. "
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#p
Value
The benefits less the costs of a decision option. Businesses often measure this as the incremental profit or cash flow associated with an option relative to "business as usual." (i.e., not doing anything)
Which of the following is not one of the four steps in the decision making process?
Separate routine decision problems from non-routine decision problems
The value of an option equals its
Benefits less its costs.
By definition, the value of an option is the net benefit of that option which equals benefits of the option less its costs.
The opportunity cost of any decision option is?
The value to the decision maker of the next best option.
Opportunity cost of any decision option is the value of the option that is forgone. If we have more than one alternative to the chosen decision option, then the value of the next best option is the
Managerial accounting is a branch of accounting which
Assists in making business decisions.
Response Feedback:
This is a key characteristic of managerial accounting. The major focus of managerial accounting is to help managers to make good decisions.
John has three options for summer work. He can do lawn work for $100 per week, babysit for $125 per week, or work at the local pool for $175 per week. All of the options would require approximately 20 hours of work per week. In addition, if he chooses to
$155
Response Feedback:
The value of option 1(do lawn work) is $100. The value of option 2 (babysit) is $125. The value of option 3 (work at the pool) equals $175 minus $20 = $155. What is the next best option to babysit? Look at all the other options and
Which of the following is something owners might do to influence employees to achieve organizational goals?
A, B and C are things owners might do.
Response Feedback:
Refer to slide # 5 of PowerPoint lecture for module 1
The concepts of value and opportunity cost emphasize that every decision involves
Trading off what the decision maker gets with what the decision maker gives up.
Response Feedback:
The opportunity cost of a decision is defined as the value of the (best) option that could not be chosen. Therefore, value and opportunity cost emphasizes t
Greg, a college student, knows that the opportunity cost of taking a class this summer is $1,200. This means that
By taking the class, Greg will have the opportunity to earn $1,200 more in a job than he would without taking the class.
Response Feedback:
Follows from the definition of opportunity cost.
The owner of a driving range is trying to determine the value of hiring additional part time help. If she is able to hire someone to work in the shop for 15 hours per week for $10 per hour, she estimates that she can teach approximately 10 additional less
$250
Response Feedback:
Value of hiring a new employee = benefit of hiring a new employee - cost of hiring a new employee = ($ 40 x 10) - (15 x $10) = $250
Control Decisions
Decisions related to motivating, motivating, monitorying, and evaluating performance
Decision
Chossing an option from a sset of options to achieve a goal
Decision framework
A four-step process that consists of
specifying the decision goals, identifying available op- tions, evaluating these options, and then selecting the option that best meets the decision maker's goals.
Financial accounting
Accounting information system that aims to meet the needs of decision makers outside the organization.
Goals .
Objectives that decision makers try to achieve.
Managerial accounting
Accounting information system that aims to meet the needs of decision makers inside
an organization.
Opportunity cost .
The value of the next-best option."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>
Organization"
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
The value of the next-best option."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Organization chart
A graphical representation of the
hierarchical relations among positions in an
organization."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Planning decisions
Decisions about acquiring and us-
ing resources to deliver products and services to
customers."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Shareholder value
The long-run expected wealth poten-
tial of an organization to its shareholders."
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#page(26)>.
Treasurer
The person in an organization who manages cash flows and serves as the contact point for banks,
bondholders, and other creditors. "
(Balakrishnan 26)
Balakrishnan, Ramji. Managerial Accounting, 2nd Edition. John Wiley & Sons, 08/2012. <vbk:9781118572719#p
Value
The benefits less the costs of a decision option. Businesses often measure this as the incremental profit or cash flow associated with an option relative to "business as usual." (i.e., not doing anything)
Which of the following is not one of the four steps in the decision making process?
Separate routine decision problems from non-routine decision problems
The value of an option equals its
Benefits less its costs.
By definition, the value of an option is the net benefit of that option which equals benefits of the option less its costs.
The opportunity cost of any decision option is?
The value to the decision maker of the next best option.
Opportunity cost of any decision option is the value of the option that is forgone. If we have more than one alternative to the chosen decision option, then the value of the next best option is the
Managerial accounting is a branch of accounting which
Assists in making business decisions.
Response Feedback:
This is a key characteristic of managerial accounting. The major focus of managerial accounting is to help managers to make good decisions.
John has three options for summer work. He can do lawn work for $100 per week, babysit for $125 per week, or work at the local pool for $175 per week. All of the options would require approximately 20 hours of work per week. In addition, if he chooses to
$155
Response Feedback:
The value of option 1(do lawn work) is $100. The value of option 2 (babysit) is $125. The value of option 3 (work at the pool) equals $175 minus $20 = $155. What is the next best option to babysit? Look at all the other options and
Which of the following is something owners might do to influence employees to achieve organizational goals?
A, B and C are things owners might do.
Response Feedback:
Refer to slide # 5 of PowerPoint lecture for module 1
The concepts of value and opportunity cost emphasize that every decision involves
Trading off what the decision maker gets with what the decision maker gives up.
Response Feedback:
The opportunity cost of a decision is defined as the value of the (best) option that could not be chosen. Therefore, value and opportunity cost emphasizes t
Greg, a college student, knows that the opportunity cost of taking a class this summer is $1,200. This means that
By taking the class, Greg will have the opportunity to earn $1,200 more in a job than he would without taking the class.
Response Feedback:
Follows from the definition of opportunity cost.
The owner of a driving range is trying to determine the value of hiring additional part time help. If she is able to hire someone to work in the shop for 15 hours per week for $10 per hour, she estimates that she can teach approximately 10 additional less
$250
Response Feedback:
Value of hiring a new employee = benefit of hiring a new employee - cost of hiring a new employee = ($ 40 x 10) - (15 x $10) = $250