Decision-Making Model in Managerial Accounting

The video tutorial explains a five-step decision-making model. It begins with identifying the decision, emphasizing the importance of understanding the true nature of the decision. The second step involves identifying alternatives, which can vary based on the decision's scope. The third step focuses on relevant costs and revenues, distinguishing between avoidable and unavoidable costs. The fourth step highlights the importance of qualitative issues, often overlooked in favor of quantitative analysis. Finally, the fifth step involves evaluating alternatives to choose the one with the greatest benefit or least cost.

What is the first step in the decision making model?

Why is it important to identify the decision you are trying to make?

What are the alternatives to consider when making a decision?

What is meant by relevant costs and revenues in the decision making process?

How can qualitative issues impact decision making?