Answer to Question #244393 in Management for bili

Question

10. Discuss what forms of relevant information are applicable for business decisions related to Make or Buy Decisions, Accept or Reject Special Orders; Continue or Discontinue Business, and Sell or Process Further, and others 

Answer 1

Relevant information includes the predicted future costs and revenues that differ among the alternatives. Any cost or benefit that does not differ between alternatives is irrelevant and can be ignored in a decision. All future revenues and/or costs that do not differ between the alternatives are irrelevant.

Factors would include;

• The capacity required to fulfill the special order.
• Whether the price offered by the buyer will cover the cost of producing the products.
• The role of fixed costs in the analysis.
• Qualitative factors.