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9609 · 5.4.3

Uses of cost information

9609 AS — how cost data supports pricing, profit analysis, cost control, and strategic decisions.

Need to know

What you need to know

  • **Make-or-buy:** Compare relevant internal cost with external quote; ignore sunk costs.
  • **Close or continue:** If contribution is negative and no strategic reason to stay, consider closure.
  • **Capacity:** Rank uses of scarce resources by contribution per limiting factor.

Explanation

Uses of cost information

  1. **Make-or-buy:** Compare relevant internal cost with external quote; ignore sunk costs.
  2. **Close or continue:** If contribution is negative and no strategic reason to stay, consider closure.
  3. **Capacity:** Rank uses of scarce resources by contribution per limiting factor.
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