Page 157 - MAC4861_2 Costing class slides part 2

INFORMATION FOR DECISION-MAKING

Introduction

• Note that business decisions are influenced by

managerial subjectivity as managers normally draw

from their expert knowledge, past experience and

existing situations likely to impact on future events due

to the uncertain business environment.

• In this section we shall look at how the principle of

probability theory enables management to consider

the degree of uncertainty associated with each course

of action when making business decisions.

• We shall also describe and calculate the value of

perfect information, and finally explain the

diversification strategy.

157