Question

Which of the following is a guideline used by management accountants to assist in strategic and operational decision making?

A) employing a cost-benefit approach
B) employing a supply chain approach
C) employing a six sigma approach
D) employing a regression approach

Answer 1

Management accountants use a cost-benefit approach to assist in decision-making, comparing costs against benefits and weighing marginal costs against marginal benefits to help choose the most advantageous option.

Step-by-step explanation:

Among the guidelines used by management accountants to assist in strategic and operational decision-making, the correct option is A) employing a cost-benefit approach. This process involves comparing the sacrifices and gains to help make decisions. The Cost Benefit Analysis, a central tool in this approach, charts costs on one side against benefits on the other, considering all factors like money, effort, experience, and other improvements in the decision-making scenario. Furthermore, considering marginal costs and marginal benefits can be extremely helpful for the firm, as these insights into fixed costs, variable costs, and potential revenues influence the profit-maximizing quantity to produce and the price to set.