Jefferson Inc.’s accountants use their sophisticated knowledge of the company’s cost behaviors, such as variable, fixed, mixed, semi-variable, and step costs, to build statistical models regarding the specific decisions Jefferson should make to minimize its total costs. Which specific data analytic type is being used by Jefferson’s accountants in this scenario? 

[Refer to Exhibit 2.2 on p. 39.]

a. Predictive
b. Diagnostic
c. Prescriptive
d. Descriptive

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Data Analytic Question Answered Management Accounting Analysis Example Type Descriptive What is happening? Diagnostic Predictive Prescriptive Create a profit and loss analysis of current products (games, virtual reality headsets, controllers) based on historical financial performance data. Why is it happening? Conduct an analysis that identifies the drivers of customers' most valued particular product preferences (features, platforms, consoles, multi- player capabilities). What is likely to happen? Forecast the financial impact (in terms of lost revenue) from the risk that competitors introduce new games with innovative and popular features. What do I need to do? Build a model that informs employees about specific choices to make across the value chain (from game design to distribution to marketing to aftermarket customer interfaces) to optimize profitability.