A firm that provides tax services to the public intends to offer a premium tax-return service at a higher price than their current services. The managers of the company ask experts in marketing to determine how much an effective ad campaign for such a service would cost, and by how much sales would be increased. They consult experts in economics to calculate the increases in revenue from the success of the campaign, experts in operations to determine the cost of offering the service, and experts in strategy to anticipate possible countermoves by competitors. This example illustrates which of the following points about the role of financial managers?
A)Ultimately the decision whether to take a certain course of action rests with the financial managers of a company.
B)All of the costs and benefits associated with a decision can never be fully identified.
C)Real-world decisions are complex and require information from many sources if the decisions are to be valid.
D)Determining the costs associated with making a decision is easier than determining the potential benefits of the decision.

Question

Quizplus · Accepted Answer

The example illustrates that real-world decisions are complex and require information from many sources if they are to be valid, as the managers of the tax service firm are consulting experts in marketing, economics, operations, and strategy to make an informed decision about offering a premium service. The example does not indicate that financial managers have ultimate decision-making authority or that all costs and benefits cannot be fully identified. Additionally, the example suggests that determining the potential benefits of a decision, such as increased sales revenue, can be as important as determining the costs associated with making the decision.

A Firm That Provides Tax Services to the Public Intends