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COST MANAGEMENT STRATEGIES FOR BUSINESS DECISIONS 4TH EDITION PDF

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Table of Contents

That, however, ignores the opportunity costs of lost outputs. Since opportunity costs almost never show up on accounting reports, it is easy for managers to ignore or be unaware of them.

A less extreme but possibly damaging outcome could be for each department to minimize the costs of its assigned work, but ignore its impacts on other departments. If all the processes of an organization are balanced that is, all can produce just the right amounts of output when needed , then minimizing the cost of each process will minimize overall costs.

Most organizations are not perfectly balanced, however, and minimizing the costs of each process may impair the ability of another process to meet its objectives.

Thus, one process may produce too much output, leading to waste. Another process may produce too little output, leading to missed opportunities for other processes that depend on the former process output. Unexpected or changed demands from internal and external customers may require changes in schedules and outputs in many parts of the company.

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To not meet those changes could result in significant opportunity costs for the company as a whole. Thus, encouraging managers to focus only on their process es may be a myopic management policy. Companies also need to encourage cooperation among departments.

The hoped-for cost savings from automating some manufacturing processes did not materialize because the company apparently automated an inflexible, inefficient process.

Thus, the company replaced humans with more expensive robots but did not take advantage of the flexibility that automated manufacturing offers. Though GM could make cars more quickly, there was insufficient demand for the kinds of cars GM was prepared to make to justify the increase in capacity and cost.

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For example, possible costs of outsourcing include costs of retraining or terminating current tax employees. Avoiding these costs alternatively could be counted as benefits of retaining tax services internally.

Possible benefits of outsourcing could be lower out-of- pocket costs and access to better tax expertise. To the extent possible, you should quantify these costs and benefits.

Comparing quantified costs and benefits is part of the analysis, but a complete analysis also compares qualitative costs and benefits. However, if the information is not critically important and the cost of maintaining the tax reporting capability is high, the company may consider outsourcing tax reporting to an organization that specializes in tax work — as long as the quality of the service can be assured.

Whether the qualitative information outweigh the quantified information is a judgment that you may have to make. Persons interested in tax careers probably should anticipate that most outsourced tax work will be done by professional accounting or law firms.

If outsourcing of tax services grows, there will be fewer career opportunities for non-degree or uncertified tax preparers. That, however, ignores the opportunity costs of lost outputs. Since opportunity costs almost never show up on accounting reports, it is easy for managers to ignore or be unaware of them.

A less extreme but possibly damaging outcome could be for each department to minimize the costs of its assigned work, but ignore its impacts on other departments. If all the processes of an organization are balanced that is, all can produce just the right amounts of output when needed , then minimizing the cost of each process will minimize overall costs.

Most organizations are not perfectly balanced, however, and minimizing the costs of each process may impair the ability of another process to meet its objectives.Persons interested in tax careers probably should anticipate that most outsourced tax work will be done by professional accounting or law firms.

You can check your reasoning as you tackle a problem using our interactive solutions viewer. As a Chegg Study subscriber, you can view available interactive solutions manuals for each of your classes for one low monthly price.

The benefits of outsourcing must outweigh the costs. JavaScript Not Detected. Can I get help with questions outside of textbook solution manuals?

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