Decision Making - Dani Ki Costing - CA Final Video Lectures
Decision Making - Dani Ki Costing - CA Final Video Lectures | Decision Making - Dani Ki Costing - CA Final Video Lectures | Decision Making - Dani Ki Costing - CA Final Video Lectures
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Dani Ki Costing
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Final Video Lectures
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Decision Making
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Lecture 1
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Lecture 2
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Lecture 3
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Lecture 4
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Lecture 5
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Lecture 4
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The End
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Decision Making
Decision Making is inevitable for any business organization whether
small or large. The process of production, selling and distribution activities,
strategy making etc differs from organization to organization. So there are
different cost structures for different types of business. For decision making
purpose different cost concepts are used and for that purpose costs are
classified in two type’s viz. Relevant Costs and Non – Relevant Costs.
Relevant costs are the costs which are going to occur in the future
and it is different in all the alternative actions taken. While those costs are
non – relevant which are historical or sunk costs, the variable expenses and
fixed expenses which are constant for every alternative action etc. Many times
dilemma occurs in deciding whether the book value of the equipment is relevant
or irrelevant.
Another concept considered in decision making is opportunity cost. Opportunity cost is the value of the foregone opportunity
which might have occurred if the same opportunity was accepted and utilized. Opportunity cost is helpful to management in taking
decision of which opportunity to be selected and which is most profitable for
the organization. This is a very famous cost concept used in decision making to
decide the earning base of the business by selecting most profitable
alternative from the opportunities available.
Other costing concepts used for decision making are notional costs,
avoidable costs, historical costs, Sunk Costs, Out of Pocket Costs, Discretionary
Costs, Committed costs, Shut down Costs, Engineered Costs and many other lots
of concepts. Decision making can be applied for different purposes like taking
decision whether to accept the offer or not, should continue or discontinue a
product etc.
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