Different ways accounting statements influence decisions

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Reference no: EM132045098

How accounting statements can help managers for making decisions. There are many different ways accounting statements influence decisions. Some are as follows:

1. For example, in departmental income statements financial performances of departments can be compared with each other to see if a department is under performing or over performing and then make appropriate decisions accordingly.

2. By observing the past records on variable overhead cost managers can decide what would be the best overhead base and overhead raise for determination of a variable overhead.

3. By looking at the sales and looking at the unit price, a unit variable cost, and overall fixed cost, managers can find the break-even point for a potential new product and then based on potential market, decide if launching the product would be feasible.

Please, provide an argument on these bases,

Please answer in word format only and in more than 400 words.

Reference no: EM132045098

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