To make appropriate decisions, companies attempt to consider not only the quantifiable costs but also relevant qualitative costs. It is also helpful to estimate in dollars the qualitative factors so that the factors are included and not just identified but then disregarded.

For each of the following items, identify which special decision(s) would be applicable and whether the factor is typically originally quantifiable or qualitative (sometimes referred to as “soft data”) and would be separately estimated.

Type of relevant cost decision:

a. Special order

b. Keep or drop a product line

c. Constraint of resources

d. Make or buy

e. Joint process sell at split-off or process further

f. Rework defective units

Type of information:

i. Readily viewed as quantitative originally

ii. Qualitative (not easily obtained) and must be separately estimated

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Factors Actual and perceived (by the customer) quality, price, convenience, and on-time delivery after the sale Special payment options offered by suppliers Number of returns due to poor quality Number of special design features and packaging required beyond the basic model Bottlenecks and scheduling problems Availability of materials and labor Cost of maintaining adequate inventory Ordering costs Available production capacity Complementary product or service lines Competition's likely response to our decision Type of Relevant Cost Decision(s) Type of Information