Chapter12: Differential Analysis: The Key to Decision Making

The flashcards below were created by user gabo on FreezingBlue Flashcards.

  1. Avoidable cost
    A cost that can be eliminated by choosing one alternative over another in a decision. This term is synonymous with relevant cost. (p. 528)
  2. Bottleneck
    A machine or some other part of a process that limits the total output of the entire system. (p. 544)
  3. Constraint
    A limitation under which a company must operate, such as limited available machine time or raw materials, that restricts the company's ability to satisfy demand. (p. 544)
  4. Joint costs
    Costs that are incurred up to the split-off point in a process that produces joint products. (p. 549)
  5. Joint products
    Two or more products that are produced from a common input. (p. 549)
  6. Make or buy decision
    A decision concerning whether an item should be produced internally or purchased from an outside supplier. (p. 539)
  7. Relaxing (or elevating) the constraint
    An action that increases the amount of a constrained resource. Equivalently, an action that increases the capacity of the bottleneck. (p. 546)
  8. Relevant benefit
    A benefit that differs between alternatives in a decision. Synonyms are differential benefit and incremental benefit. (p. 528)
  9. Relevant cost
    A cost that differs between alternatives in a decision. Synonyms are avoidable cost, differential cost, and incremental cost. (p. 528)
  10. Sell or process further decision
    A decision as to whether a joint product should be sold at the split-off point or sold after further processing. (p. 551)
  11. Special order
    A one-time order that is not considered part of the company's normal ongoing business. (p. 542)
  12. Split-off point
    That point in the manufacturing process where some or all of the joint products can be recognized as individual products. (p. 549)
  13. Sunk cost
    Any cost that has already been incurred and that cannot be changed by any decision made now or in the future. (p. 528)
  14. Vertical integration
    The involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales, and after-sales service. (p. 539)
Card Set:
Chapter12: Differential Analysis: The Key to Decision Making
2012-12-15 18:25:19
ACC 202

Key terms
Show Answers: