Page 49 - MAC4861_2 Costing class slides part 2
P. 49
DECISION MAKING
Introduction
• In non-routine decisions, only those costs and benefits
relevant to the specific alternative courses of action
should be considered.
• In this section we shall look at the key concept that
should be applied in making product-mix decisions
when capacity constraints exist and also discuss
equipment decisions, explaining why equipment book
values are irrelevant in such decisions.
• Finally, we shall describe the process of maximising
operating profit when confronted with bottleneck and
non-bottleneck operations, the theory of constraints
(TOC).
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