When analyzing short-term business decisions,what are two important factors?

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Quizplus · Accepted Answer

When analyzing short-term business decisions, it is important to focus on relevant costs - costs that will be affected by the decision - and use the contribution margin approach. This approach considers the expected revenues and variable costs associated with each alternative and helps determine which alternative will generate the most profit. Sunk costs (costs that have already been incurred and cannot be recovered) are irrelevant in making short-term decisions. Additionally, qualitative data and historic costs may be helpful in providing context and background, but they should not be the primary focus.

When Analyzing Short-Term Business Decisions,what Are Two Important Factors