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and Rajan, M. (2014). Managerial Accounting. (1st ed.). Boston: Pearson Prentice Hall
Appendix A
Appendix B
5-Step Critical Thinking Decision-Making Process Matrix
Step 1: Identify the problem(s) and uncertainties.
What exactly is the problem…
(Study the problem to clarify what you need to know to solve it. Distinguish problems over which you have some control from problems over which you have no control. Pay special attention to controversial issues in which it is essential to consider multiple points of view.)
The manager of Shamrock Manufacturing is planning replacing of large piece manufacturing equipment that Shamrock uses in production process with a more efficient model. The manager is hesitating of this decision, although the representative of Darien Engineering made some compelling arguments in favor of replacing the 3-years old equipment.
The problem is this …
(Write out the problem clearly and precisely, with details. Write the problem in different ways until you get it perfectly clear in your mind.)
The replacement of the equipment promises reducing the direct manufacturing costs and electricity costs. The new equipment costs $90,000 and will have 2-years useful life.
This is an important problem because… (Remember in business, a problem is important if it affects the bottom line. So how does this problem affect the bottom line (net income). The manager of the plant is hesitating of replacing, because within the next year he should be promoted from Shamrocks to larger plant to Houston. The key question(s) that needs to be answered to solve this problem is… (Every problem has questions connected to it. Here we want you to write out the most important question(s) you need to answer to solve the problem. State it clearly and precisely. Being specific is very important.) The manager of the plant before to decide, must identify all relevant costs. Step 2: Obtain information. The following information is needed to answer this question… (Here you are looking for the facts and/or data that help you solve the problem. Actively seek the information most relevant to the question. Include in that information options for action, both short-term and long-term. Recognize limitations in the terms of resources such as money, time, and people.) Old machine historical costs, Old machine current book value, market value of the old machines, the cost of the new equipment. Some important assumptions I am using in my thinking are… (Figure out what you are taking for granted. Make sure these assumptions are reasonable. Watch out for self – serving or unjustified assumptions.) All historical costs does not relate to a situation requiring decision because they have occurred already and don’t have any effect on the cost further. The points of view relevant to this problem belong to… (Who are your stakeholders? Determine whether the stakeholder’s point of view is relevant.) The relevant costs for this situation are operating costs for the next two years, the disposal costs of the old machine and the costs of the new machines. Note: Remember to view the information you have obtained for potential bias. This is from the perspective of your own bias to the research and the bias of the authors who …show more content…
(8 points)
Discusses the decision that would be made in years one and two and demonstrates solid ability to accomplish the assignment.
(9-10 points)
Discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment.
Vaguely discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment or completely off the topic.
(0-7 points)
Discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment and, for the most part, fulfills assignment requirements.
(8 points)
Discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment and demonstrates solid ability to accomplish the assignment.
(9-10 points)
Recommends if the company should keep or replace the equipment and why.
Vaguely recommends if the company should keep or replace the equipment and why or completely off the topic.
(0-11 points)
Recommends if the company should keep or replace the equipment and why and, for the most part, fulfills assignment
Appendix A
Appendix B
5-Step Critical Thinking Decision-Making Process Matrix
Step 1: Identify the problem(s) and uncertainties.
What exactly is the problem…
(Study the problem to clarify what you need to know to solve it. Distinguish problems over which you have some control from problems over which you have no control. Pay special attention to controversial issues in which it is essential to consider multiple points of view.)
The manager of Shamrock Manufacturing is planning replacing of large piece manufacturing equipment that Shamrock uses in production process with a more efficient model. The manager is hesitating of this decision, although the representative of Darien Engineering made some compelling arguments in favor of replacing the 3-years old equipment.
The problem is this …
(Write out the problem clearly and precisely, with details. Write the problem in different ways until you get it perfectly clear in your mind.)
The replacement of the equipment promises reducing the direct manufacturing costs and electricity costs. The new equipment costs $90,000 and will have 2-years useful life.
This is an important problem because… (Remember in business, a problem is important if it affects the bottom line. So how does this problem affect the bottom line (net income). The manager of the plant is hesitating of replacing, because within the next year he should be promoted from Shamrocks to larger plant to Houston. The key question(s) that needs to be answered to solve this problem is… (Every problem has questions connected to it. Here we want you to write out the most important question(s) you need to answer to solve the problem. State it clearly and precisely. Being specific is very important.) The manager of the plant before to decide, must identify all relevant costs. Step 2: Obtain information. The following information is needed to answer this question… (Here you are looking for the facts and/or data that help you solve the problem. Actively seek the information most relevant to the question. Include in that information options for action, both short-term and long-term. Recognize limitations in the terms of resources such as money, time, and people.) Old machine historical costs, Old machine current book value, market value of the old machines, the cost of the new equipment. Some important assumptions I am using in my thinking are… (Figure out what you are taking for granted. Make sure these assumptions are reasonable. Watch out for self – serving or unjustified assumptions.) All historical costs does not relate to a situation requiring decision because they have occurred already and don’t have any effect on the cost further. The points of view relevant to this problem belong to… (Who are your stakeholders? Determine whether the stakeholder’s point of view is relevant.) The relevant costs for this situation are operating costs for the next two years, the disposal costs of the old machine and the costs of the new machines. Note: Remember to view the information you have obtained for potential bias. This is from the perspective of your own bias to the research and the bias of the authors who …show more content…
(8 points)
Discusses the decision that would be made in years one and two and demonstrates solid ability to accomplish the assignment.
(9-10 points)
Discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment.
Vaguely discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment or completely off the topic.
(0-7 points)
Discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment and, for the most part, fulfills assignment requirements.
(8 points)
Discusses whether the decisions would be different for years one and two compared to the initial cost of the new equipment and demonstrates solid ability to accomplish the assignment.
(9-10 points)
Recommends if the company should keep or replace the equipment and why.
Vaguely recommends if the company should keep or replace the equipment and why or completely off the topic.
(0-11 points)
Recommends if the company should keep or replace the equipment and why and, for the most part, fulfills assignment