Question

Discuss the qualitative factors in Keep or Drop Decision in details.

Answer 1

Qualitative factors must be taken into consideration before making any business decisions. These factors have the biggest impact on the business may be employee morale. In a business when employee morale goes down, the productivity also automatically goes down.

Qualitative factors related to keep or drop decisions usually include considerations of employees that will be terminated when product is dropped, the effect a lay off might have on employees that are not terminated, the effect of customers who previously purchased the product being dropped, effects of suppliers from whom the materials required for the product will no longer be purchased and external reputation. Thus with a proper understanding of qualitative factors that are required to be examined when making managerial accounting decisions, it should make sure that small business is taking into consideration all of the ramifications of business decisions