Listed below are a number of statements concerning management’s decision-making process. Identify whether each statement is correct or incorrect. For all incorrect statements, indicate how to correct the statement.
1. The final step in management’s decision-making process is to actually make the decision.
2. In making business decisions, management will ordinarily only consider financial information because it’s objectively determined.
3. The first step in management’s decision-making process is to determine the decision alternatives.
4. Relevant costing is used for short-term decision making because it focuses only on the costs and benefits that are relevant to the decision at hand.
5. Under incremental analysis, variable costs will change under different courses of action, but fixed costs will never change.
6. Decisions involve a choice among alternative courses of action.
7. When using differential analysis, some costs will change under alternative courses of action, but revenues will not change.