Accounting › Section W · Short-term decision making › Topic W.1
Relevant information and sunk costs
Every business decision is a choice between alternatives, and most of the numbers on a manager's desk have no bearing on it. Learning to pick out the few figures that actually change from one option to the next is the core skill of short-term decision making.
In this topic
- Decisions are choices between alternatives
- A five-step decision process
- What makes a cost or revenue relevant
- Avoidable and unavoidable costs
- Sunk costs
- Future costs that do not differ
- Opportunity costs
- Quantitative and qualitative factors
- Worked example: a spare room at Tregarth Ceramics
- Worked example: a batch of misprinted mugs
- Common mistakes to avoid
- Key takeaways
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