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Managing Costs. Managing Costs: Overview. Forward-looking Marginal/Incremental to decision Excess Capacity: free resources? Scope, Scale, Learning. Implicit Costs & Tradeoffs. Implicit Costs. Costs not appearing on income statement but impacting items on it Implicit costs are costly - PowerPoint PPT Presentation
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Managing Costs
Managing Costs: Overview Forward-looking
Marginal/Incremental to decision
Excess Capacity: free resources?
Scope, Scale, Learning
Implicit Costs & Tradeoffs
Implicit Costs Costs not appearing on income statement
but impacting items on it
Implicit costs are costly Just as “real” as explicit costs
Forward-looking, not historical Estimates of tradeoffs
Open for big errors
Turnovers as Implicit Cost:John Wooden as Manager
No Cost To Retained Earnings?
Bias Toward Explicit Costs?Impact on Product Costly
Common But Costly?Power of Habit/History
Choosing Between Implicit Costs