What steps are frequently involved in management’s decision-making process?
Decision-making process:
Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative resolutions. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.
To determine: The steps involved in management’s decision making process.
Explanation of Solution
Management decision making process does not always adhere to a set pattern due to the dynamic nature of decision making process. However, few essential steps involved in the decision making process are as follows:
- Identify the problem and assign responsibility.
- Determine and evaluate possible courses of action, based on the relevant revenue and cost data. The evaluation will reveal the expected overall effect on the net income.
- Make a decision based on both financial and non-financial information such as information pertaining to revenue and cost and their effect on company’s overall profitability, decision on employee turnover, etc.
- Review results of the decision. Here, accounting prepares internal reports that review the actual impact of the decision.
Hence, the steps involved in management’s decision making process are explained as above.
Want to see more full solutions like this?
Chapter 7 Solutions
Managerial Accounting: Tools for Business Decision Making
- What are some activities and tasks a manager might perform when engaging in the controlling function of management responsibilities?arrow_forwardWhat is the purpose of management accounting?arrow_forwardWhat is operational feasibility and what problems must management address to achieve it?arrow_forward
- The managerial decision-making process has which of the following as its third step? A. Review, analyze and evaluate the results of the decision. B. Decide, based upon the analysis, the best course of action. C. Identify alternative courses of action to achieve a goal or solve a problem. D. Perform a comprehensive differential (differential) analysis of potential solutions.arrow_forwardIdentify and describe the levels of management, including the various types of decisions managers at each level make.arrow_forwardExplain how a manager can use CVP analysis to make decisions regarding changes in operations or pricing structure.arrow_forward
- Explain how managerial accountants help managers plan, control, and evaluate.arrow_forwardShould a managerial accounting system provide both financial and nonfinancial information? Explain.arrow_forwardWhat is a management control system? What are its components and how does the system help the business?arrow_forward
- Explain the components of the total cost equation and describe how each of the components can be used by management for decision-making.arrow_forwardAn effective managerial accounting system should track information about an organizations activities in which of the following areas? a. Development b. Marketing c. Production d. Design e. All of these.arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:CengageCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningAccounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning