11.5: Putting It Together- Relevant Revenues and Costs
Everyday managers may be tasked with a new challenge. Module 11 just gave you a whole new set of tools to use to improve the profits your department or company. Keep in mind that only the costs that vary between different options matter. Those that stay the same are irrelevant to your decision making process, and ignoring them will save you tons of time while you evaluate options and make decision.
Relevant costs can be different depending on the decision you need to make. What was completely irrelevant in one scenario might be really important in the next. So how to best use your machine that you can only use for 20 hours per day to create the highest profit, or determining whether to continue a product line should all be easy now right?
Keep practicing your decision making skills by reviewing the examples, and thinking through which costs will be important as you decide.