Relevant Information Analysis in the Short Term Decision-Making: A Case of a Medical Services Provider in Peru

• In Event: Case Studies

Abstract

The concepts and tools of management accounting have been successfully applied in a number of manufacturing industries. However, less research has been done on the application of management accounting in service companies, particularly in the health services sector in developing countries, particularly in Peru. Moreover, most management accounting instruction deals with problems that are artificially simple: the evaluation of a single yes-or-no proposal.
This paper presents an actual case of decision-making in a health services provider where there are more choices than simply deciding yes or no on single proposal. Furthermore, the company studied operates in Peru, where medical equipment usage differs from that of developed countries, changing the relevant information that should be used in decision-making.
The contributions of this paper are: (1) it complements the few existing studies of management accounting in the medical services industry; (2) it adds to the literature related to analysis of information relevant to strategic decision-making; (3) it presents an integrated approach for dealing with multi-option decision scenarios; (4) it proposes a methodology for analyzing relevant costs (specifically depreciation) in developing countries; (5) it presents a case of analysis with relevant information where some variable costs represent irrelevant information; and (6) it presents an actual case of management accounting decision-making in a developing country (Peru) where there is little published accounting research.


Keywords: Management Accounting, Relevant Information, Medical Services

Authors

• Gustavo A. Tanaka, Kyoto University of Foreign Studies

• Sergio Cherres, Pontificia Universidad Catolica del Peru