Describe the$$ input$-$process$-$output model as it applies to capital budgeting.

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Part $1$

The first part of the capital budgeting process is

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the input gathering phase.

to assign value to each service provided.

to calculate future cash inflows.

Management should

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identify potential capital investments and collect the relevant information and key inputs for the decision.

identify potential variable costs that can be minimized and gather data that will increase cash inflows.

One key input is

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predicted net cash flows from the investment.

predicted sales increase from due to a decrease in expenses.

to increase the flow of cash liquidity while maintaining budget constraints.

Once the managers have collected key$$ information, they

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distribute this information to key employees to implement changes within each department of the organization.

process this information through various capital budgeting models to financially analyze the potential projects.

In the output $$phase$,$ managers use the results from the capital budgeting models to

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collect data on how efficient employees carried through on the cost changes and how effective the system was.

consider the alternative capital investment projects, and select and implement the decision.

$$Finally$,$ after$$ implementation,

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auditors come into the company and evaluate how effective the capital budgeting process is$.$

employees who provided the largest cost savings, obtains a bonus.

managers keep the process in place and do not re$-$evaluate.

managers perform a post$-$audit to evaluate the decision.