Decision Analysis

Accounting for Decision Making

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This technical note explains how to quantify the differential impact of decision alternatives on a firm's economic value. It lays out the basic cost concepts (variable and fixed costs, direct and indirect costs, opportunity costs, breakeven point, etc.). The note also analyzes the factors that can influence the decision-making process, such as capacity utilization or possible restrictions. Finally, it compares the differential analyses in terms of cash flow vs. accounting earnings.
Bibliographic citation: Ormazábal, Gaizka; Soler, Edi, "Accounting for Decision Making", IESE, CN-224-E, 06/2014
Date: 12/06/2014
Author(s): Ormazábal, Gaizka; Soler, Edi
Document type: Technical Note
Department: Accounting and Control
Languages: Spanish / English
Learning objective This note can be used for any course in management accounting or cost accounting, in the section on decision analysis.