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Managerial: Accounting by Elizabeth Davis, Charles E. Davis

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8

USING ACCOUNTING INFORMATION TO MAKE MANAGERIAL DECISIONS

After studying this chapter, you should be able to meet the following learning objectives (LO).

  1. Identify relevant information for decision making. (Unit 8.1)
  2. Determine the qualitative and quantitative impacts of special order pricing. (Unit 8.2)
  3. Determine the qualitative and quantitative impacts of outsourcing decisions. (Unit 8.3)
  4. Determine how to allocate constrained resources to maximize income. (Unit 8.4)
  5. Calculate the effects on operating income of keeping or eliminating operations. (Unit 8.5)

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The Pitch

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At the weekly meeting of C&C Sports' management team, President George Douglas began his usual polling of the vice presidents to learn the issues they were facing in the coming week. Jonathan Smith, vice president of marketing, spoke first. “I'll start with some good news. I just got a text message from Jim Shaw, one of our sales reps. He thinks Central Independent School District is ready to sign a five-year contract to purchase 1,000 practice jerseys a year. That really would give us a head start on our move to supply school districts. The district's athletic director wants a couple of changes to our standard jersey, but I'm sure it's something we can accommodate.”

Chad Davis, vice president of operations, chimed ...

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