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ABSTRACT
Decision making is complex and time limited process that begins with insight of problem and it ends with making a decision. Significance of decision making in today business world is growing, especially because of market situation, what is in primary caused by global financial crisis.
Furthermore, it is important to accent that because of opening towards european and world market, where competition is extremely big, encirclement is dynamic and quickly adaptable, it is impossible to survive if management is not prepared to make decison rapidly, with no space for mistakes, because wrong decision can destroy the whole business.
In order to make good business decisions, management must be in dispose of correct and well - timed information and data. Key information for management are correct information about costs that are related to certain decision. Because of that, in this paper are analyzed key terms that are related to costs and importance of cost function in business decision making.
Furthermore, the hardest and most responsible thing in managing is making decision. Making decision, i.e. capability and readiness for taking responsibility is a characteristic that is typical for only small number of people. Without reliable information about costs and their influence on the price, revenues and quality of products or services, it is not possible to make quality decision.
Because of importance of costs in business decision making, so as different possibilites of appliance, depending on activities, there are many number of models of cost management that are developed, and in sequel of this paper there will be more word about them. According to that, in this paper are analyzed basic determinants of costs and importance of cost function in business decision making. Basic framework of this paper is presentation of cost management based on activities that is in function of enlargement of profitability, so as presentation of costs of providing services to buyer and analysis of profitability.
Keywords: managerial economics, cost managemen
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