Explain why cost information is important for business decision-making.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2016). The mark or mark type is shown in brackets.

1. [4-5 marks] Effective explanation of the importance of costing
2. [2-3 marks] Limited explanation of the importance of costing
3. [1 mark] Understanding of costing
4. Costing information is an important factor for the following: key factor in determining profits
5. informs pricing decisions
6. informs product decisions
7. Costing information facilitates control/monitoring/comparisons.
8. Costing assists in setting budgets and targets
9. Assists in resource allocation decisions
10. Costing vital in decisions relating to business options – different production methods, alternative location decisions. Costing is at the heart of business decision-making.