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