Decision Making and Incremental Analysis
Decision Making: Post comments and explain, with examples, how decision making and analysis, with the tools from our course, may be of value to you and your future endeavors. Include specific examples such as a company seeking to increase profits would ....
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The article I chose is about the federal government's budget and it explains where the money goes. As of October 31, 2015 the federal government's revenue was a little over 3.26 trillion during the fiscal year. Some of the largest accounts that are part of the budget include (Patton, 2015):
• Medicare/Medicaid 999.75 billion
• Social Security 884.47 billion
• Defense 583.33 billion
• Federal Pension 253.73 billion
• Net interest on debt 221.54 billion
Healthcare will continue to increase. According to (Copeland, 2014) People's life expectancy in 2012 to to 78.8 years, in 2011 it was 78.7. Life expectancy for women is 81.2 and for men it is 76.4; and those are estimates for people born in 2012. Because of both of these issues, all the above will increase. The national debt will also increase and the United States can no longer afford to keep overspending as in the past. As the deficit grows, it causes the federal debt to rise.
Patton, M (2015) A Look At The Federal Budget and Why We May Be Headed For Trouble. Retrieved from https://forbes.com/sites/mikepatton/2015/10/31/a-look-at-the-federal-budget-and-why-we-may-be-headed-for-trouble/#59b11c5377de
Copland, L. (2014) Life Expectancy in the U.S. Hits a Record High. Retrieved from https://.usatoday.com/story/news/nation/2014/10/08/us-life-expectancy-hits-record-high/16874039/
Blumer, C. (2016) What You Need To Know Retrieved from http:/.abc.net.au/news/2016-05-03/budget-2016-cheat-sheet-charts/7359608
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I found an article on usnews.com about the Budget Control Act. The article was written back in August for the birthday or anniversary of the Act. The Budget Control Act came to be because federal spending and the deficit was increasing. For the fiscal year of 2012 the Act set a cap for spending and required 1.2 trillion to be saved every year for 10 years. The article mentions sequestration and discretionary cuts. Sequestration is a percentage cut of a budget but that percentage has to be the same for everything in the budget. Discretionary cuts are like cuts of wants not needs. The article states that in 2013 discretionary cuts were supposed to be split in between defense and non defense but disaster relief caused a loop hole because a lot of money was going there. The author states that there is trouble ahead for the Act and makes her opinion clear on how she and her organization feel about it. They're called Taxpayers for Common Sense and they've come up with a few solutions for the problem, you can find a link below.
https://www.taxpayer.net/library/article/super-cuts-for-the-super-committee
Alexander, R. (2016, August 2). A Budget Birthday. Retrieved October 9, 2016, fromhttps://www.usnews.com/opinion/articles/2016-08-02/congress-needs-to-find-the-deficit-reduction-promised-in-budget-control-act
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Good Evening Class,
Decision-making is a vital part of the business world. The decision making process is useful for success in operational activities. All the managerial functions such as (P-O-L-C) planning, organizing, leading and controlling are determined by decisions.
Incremental Analysis is a decision-making technique used in business to determine the true cost difference between alternative. By using Incremental Analysis, managers can focus on the relevant costs to arrive at short-term business/financial decisions quickly and more effectively.
Incremental analysis is an effective tool to determine the best alternative that can yield the highest revenues with the least costs.
For example, homework assignment 5. We were asked to compute the contribution margin ratio/profit for the current production plan vs the contribution margin ratio/profit for the proposed production plan (with equipment upgrade). Equipment was upgraded and as a result direct labor was reduced by 40%, sales increased by $1,500,000 and profit increased 148%.
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E. ELLIOT SHOULD PROCEED WITH THE PROPOSED UPGRADE
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Current Profit
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$ 435,000.00
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Proposed Profit
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$ 1,077,500.00
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Sales
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$ 6,000,000.00
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Variable Cost
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$ (2,242,500.00)
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Fixed Cost
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$ (2,680,000.00)
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TOTAL PROFIT W/EQUIPMENT UPGRADE
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$ 1,077,500.00
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