Managers must decide what products to sell, whether to make or buy coponent parts, what price to charge, what channels of distribution to use, whether to accept speacial orders at special prices, and so forth. Making such decisions is often a difficult task that is complicated by numerous alternatives and massive amounts of data, only some pf which may be relevant.
 Every decision involves choosing from among at least two alternatives. In making a decision, the costs and benbefits of one alternative must ve compared to the costs and benefits of other alternatives. Costs that differ between alternatives are called relevant costs. Distinguishing between relevant and irrelevant costs and benbefits is critical for two reasons. First, irrelevant data can be ignored saving decision makers tremendous amounts of time and effort. Second, bad decisions can easily result from erroneously including irrelevant costs and benbefits when analyzing alternatives. To be successful in decision making, managers must be able to tell the difference between relevant and irrelevant data and must be able to correctly use the relevant data in analyzing alternatives. The purpose of this chapter is to develop these skills by illustrating their use in a wide rage of decision-making situations. These decision-making skills are as important in your personal life as they are to managers. After completing your study of this chapter, you should be able to think more clearly about decisions in many facets of your life.
Fore cost terms discussed in chapter 2 are particularly applicable to this chapter. These terms are differential costs, incremental costs, opportunity costs, and sunk costs. You may find it helpful to turn vack to chapter 2 and refresh your memory concerning these terms before reading on.
 
Managers must decide what products to sell, whether to make or buy coponent parts, what price to charge, what channels of distribution to use, whether to accept speacial orders at special prices, and so forth. Making such decisions is often a difficult task that is complicated by numerous alternatives and massive amounts of data, only some pf which may be relevant.
 Every decision involves choosing from among at least two alternatives. In making a decision, the costs and benbefits of one alternative must ve compared to the costs and benefits of other alternatives. Costs that differ between alternatives are called relevant costs. Distinguishing between relevant and irrelevant costs and benbefits is critical for two reasons. First, irrelevant data can be ignored saving decision makers tremendous amounts of time and effort. Second, bad decisions can easily result from erroneously including irrelevant costs and benbefits when analyzing alternatives. To be successful in decision making, managers must be able to tell the difference between relevant and irrelevant data and must be able to correctly use the relevant data in analyzing alternatives. The purpose of this chapter is to develop these skills by illustrating their use in a wide rage of decision-making situations. These decision-making skills are as important in your personal life as they are to managers. After completing your study of this chapter, you should be able to think more clearly about decisions in many facets of your life.
Fore cost terms discussed in chapter 2 are particularly applicable to this chapter. These terms are differential costs, incremental costs, opportunity costs, and sunk costs. You may find it helpful to turn vack to chapter 2 and refresh your memory concerning these terms before reading on.
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