ICANManagement InformationData and Management Reporting2025

Aso Petroleum Limited incurred the following costs in processing a management report for Q2 2024: data collection ₦1,200,000; data analysis ₦3,400,000; report preparation ₦800,000; and distribution ₦350,000. The report enabled management to renegotiate a supply contract, saving ₦7,500,000. Applying the cost-benefit principle of management information, what is the net benefit of the report?

A₦7,500,000
B₦5,750,000
C₦1,750,000CORRECT
D₦3,650,000
AI
Toaster Teacher
Why the answer is C, and why the others tempt you.
Total cost of the report = ₦1,200,000 + ₦3,400,000 + ₦800,000 + ₦350,000 = ₦5,750,000. Net benefit = ₦7,500,000 − ₦5,750,000 = ₦1,750,000. Option A is the gross saving before deducting costs; Option B is the total cost of the report; Option D is incorrect. The cost-benefit principle requires that the value of information must exceed its cost of production.
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