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Decision Making Techniques In Managerial Accounting

1099 words - 4 pages

Managerial accounting comprises all the financial information needed to help managers make educated decisions and do their job duties efficiently. A typical manager’s responsibilities with managerial accounting include interpreting finance reports and projections and using those to make financial decisions that will affect the company. Since managers have to make routine decisions and finalize reports periodically, it is vital that they are able to conduct healthy decision making processes and are able to come to make quick educated conclusions. While there are plenty of decision making models to utilize with business situations, when it comes to making maximizing decisions the best one to use is the rational decision-making model.

BSE Veterinary Services current issue at hand is how to handle the projected influx of 6,000 extra tests that will have to be performed to measure the rate of cattle infection in the next projected period. Well they are well prepared for the current rate of 12,000 tests, considerations have to be taken into key if the projected rates continue to grow. In order to prepare for this projection, there are several considerations to take into account such as increased production costs and how to handle technician workload. In order to make a well-rounded decision on moving forward with viable resolutions, it would be best to utilize a decision making model to measure viable criteria and come forth with a well thought out conclusion (Walker, 2009).

The best decision making model to use in this situation would be the rational decision-making model, since the main objective is to maximize the potential outcome and research and time constraints are open for clarification. The rational decision-making model puts together a series of formal steps that assist in identifying the best option for the issue at hand, usually the decision that needs to be finished is of importance and the company could suffer greatly if the wrong choice is made without careful thought. This decision making model is best for situations similar to the one at hand when important strategic decisions need to be made by management (Bauer & Erdogan, 2010).

The Rational Decision-Making model is filled with eight steps that ensure through review of all items and possibilities that occur. The first step is to identify the problem at hand, the second step is establishing selection criteria in order to filter all candidates, and the third step would be evaluating the previous set criteria for true importance and rank. The forth step is making substitutes for all options and then step five is assessing those completely. The sixth step is choosing the best choice and step seven is when the final decision is put into practice. Last, the final most important step is to regroup and review the decision and how it affected the problem (Bauer & Erdogan, 2010).

When making decisions it is imperative that the prime decision maker keeps in mind various...

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