Qualitative And Quantitative Analysis

Provide a brief explanation of why a managerial decision may be made, at times, that doesn’t align with the quantitative recommendations of the analysis.

The decision that managers and CEO, s takes in an organization or company determine how progressive and productive of the company. In this unit I will be discussing several methods of analysis that will help a manager to make a sound and alternative choices in making decision in financial term.

Describe the differential analysis to drop/ keep customers; this analysis has been an issue facing companies such as manufacturing, service providers and retail companies. Managers often use profitability as a determining factor to decide whether to keep or drop a customer. (Heisinger, 2012) . However,

For example, when making a decision of eliminating a product they should consider a valuable employee or manager of the product line salary because if the product is eliminated the company will lose their vital employee attached to the product line departments.

• Allocated fixed cost are always not differential cost. However, it should be considered when making decisions. For an example, if a product line is eliminated allocated fixed costs such as rents, insurance will be reallocated to the remaining product line it will not decrease but remain as it was when the product line was not eliminated.

For example, I will a company that produces electronic fans, I will call it Fans Company. They specialized in production of table fans, standing fan and ceiling. I will Table fan Product A, standing fan Product B and ceiling fan Product. The company is experiencing decline in table fan in the segment income statement. Below are illustration of segment income statement of Fan

• It helps management in the decision making when considering about the financial stability of the producer.

• It helps management to identify the emotional feeling and morale of their employees when a segment of employees is fired, it can result to inefficient in productivity which will cause a rise in cost.

• It also helps management and accountant when making decision about important objective financial information.

Finally, to discuss sunk and opportunity costs, why must managers consider these things? Sunk cost- are cost incurred in the past that cannot be changed by future decisions and they are not differential costs because they cannot be changed by future decision, whereas, opportunity costs are the benefits foregone when one alternative is selected over another. They are differential cost and must be included when making a differential analysis (Heisinger,