Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 1 - Managerial Accounting: An Overview - Questions - Page 19: 1-8

Answer

Management accountants must understand the company's strategy in order to make financial decisions that are consistent with that strategy. For instance, McDonalds should not raise the price of it's Big Mac even if it would boost company revenue because a raise in price would be inconsistent with the company's strategy.

Work Step by Step

McDonalds focuses it's company strategy around operational excellence by offering products at a lower price than their competitors. Raising the price of the Big Mac would conflict with this strategy.
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