Question

How do you identify relevant information for decision making?

How do you determine the qualitative and quantitative impacts of special order pricing?

How do you determine the qualitative and quantitative impacts of outsourcing decisions?

Answer 1

How do you identify relevant information for decision making?

Relevant informations are all such differential costs that become liable on choosing a decision. Example of these are extra material, labour costs. Reelvant cost also includes the oppurtunity cost, that is the value of lost contribution. Relevant informations does not include the sunk costs, which are the costs that would be incurred irrespective of the decision one makes. An example for this is fixed factory rents, which are payable whatever be the decisions.

How do you determine the qualitative and quantitative impacts of special order pricing?

Determining the quantitative impact of special order is comparitively easier than than the qualitative impact. Quantitative impact is measure using the differential contribution margin on accepting the order. That is extra amount the business can make on accepting this order. Qualitative aspects are the non financial impacts of this order, this mainly includes determing how the special order effect the current customer base of the business will be effected by accepting this order, for instance Louis vuitton cannot make special order of cheap goods, this will effect the premium feel the company provides to its current customers.

How do you determine the qualitative and quantitative impacts of outsourcing decisions?

Quantitative impact of outsourcing decisions are more over the same of special order, further there should be additional importance given on calculating the effect of foreign tax, withholdings rule of outsourced country, additional compliance measure, any new tax procedures etc. Now coming to qualitative impact of outsourcing, the business will have to determine the impact on brand image, quality of the product etc.For instance if the outsourced product is not upto the earlier quality of the product customers will not be happy, another example is whether the outsourced company can be trusted for timely delivery of the products. Again another qualitative impact on outsourcing decisions is the public image of the business in associating with an outsourcer, the best example for this is latest ban of Huawei from USA.