Management Accounting for Decision Making

• Decision criteria: profit-based versus value-based.
• Data collection for decision making purposes.

Cost concepts
used for 
decision making

• Fixed and variable costs.
• Relevant and non-relevant costs.
• Avoidable and unavoidable costs.
• Opportunity costs.
• Calculation of relevant costs: materials, labour, equipment.

The main types of
decisions made by organisations 

• Minimum pricing (maximum discount) decisions.
• Accept or reject an order decisions.
• Shutdown decisions: deleting a segment or temporary closure.
• Limiting factor decisions.
• Make or buy (outsource) decisions.
• Joint products and further processing decisions.

Dealing with risk
and uncertainty in decision making

•  Expected values.
• Standard deviations.
• Decision trees.
• Real options.
• Maximax, maximin and minimax regret rules.

• Cognitive errors.
• Emotional biases.