9
USING COST INFORMATION TO MAKE SPECIAL DECISIONS
LEARNING OBJECTIVES
• Define fixed and variable costs
• Compute price, fixed cost, variable cost per unit, or quantity, given the others
• Construct and interpret a break-even chart
• Apply the concepts of contribution margin and product margin to the following types of decisions: make or buy, adding or dropping a service, and expanding or reducing a service
From time to time, administrators face such decisions as:
• Should we offer a particular service or group of services?
• What volume of services do we need to provide to break even?
• How much must we charge or be reimbursed for a service to be financially viable?
• Should we offer a service in-house or should we contract with another organization? ...
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