Uses of Cost Information
How can cost information be used for decision-making in businesses?
Cost information can be used for decision-making in businesses by comparing costs of different alternatives, evaluating cost and benefit trade-offs, identifying cost-saving opportunities, setting prices, determining product profitability, and optimizing resource allocation.
How can businesses determine the profitability of products or services using cost information?
Businesses can determine the profitability of products or services using cost information by comparing the total revenue generated by each product or service with the associated costs, including both direct and indirect costs. This analysis allows businesses to calculate the gross profit margin, contribution margin, and net profit margin for each product or service, providing insights into their profitability and informing decisions regarding pricing, product mix, and resource allocation.