Managerial Accounting: Differential Analysis – The Key to Decision Making – Flashcards
Unlock all answers in this set
Unlock answersquestion
A difference in cost between any two alternatives. Referred to as Relevant Cost
answer
Differential Cost
question
A difference in revenue between any two alternatives. Referred to as Relevant Benefit
answer
Differential Revenue
question
Cost that can be eliminated by choosing one alternative over another
answer
Avoidable Cost
question
Cost that has already been incurred and cannot be avoided regardless of what a manger decides to do
answer
Sunk Cost
question
The potential benefit that is given up when one alternative is selected over another.
answer
Opportunity Cost
question
When a company is involved in more than one activity in the entire value chain
answer
Vertically Integrated
question
A decision to carry out one of the activities in the value chain internally, rather than to buy externally from a supplier
answer
Make or Buy Decision
question
A one-time order that is not considered part of the company's normal ongoing business
answer
Special Order
question
Constraint in the system determined by the step that limits total output because it has the smallest capacity
answer
Bottleneck
question
Anything that prevents you from getting more of what you want
answer
Constraint
question
When a manger increases the capacity of the bottleneck
answer
Relaxing or Elevating the Constraint
question
Two or more products that are produced from a common input
answer
Joint Products
question
The point in the manufacturing process at which the joint products can be recognized as separate products
answer
Split-Off Point
question
The costs incurred up to the split-off point
answer
Joint Cost
question
Profitable to continue process a joint product after the split-off point so long as the incremental revenue from such processing exceeds the incremental processing cost incurred after the split-off point.
answer
Sell or process Further Decisions
