ACCNT 2020

irrelevant in decisions regarding what to do with a product after split off

joint costs are

contribution margin

a business segment should only be dropped if a company can avoid more in fixed costs than it gives up in:

make or buy decision

a decision to carry out one of the activities in the value chain internally, rather than to buy externally from a supplier, is called a(n) _____ or ________ decision

special order

a one-time sale that isn't considered part of the company's normal ongoing business is referred to as

vertical integration

being less dependent on suppliers and making profits on both parts and the final product are advantages of __________

Irrelevant costs and benefits

costs and benefits that should be ignored when making decisions are called ____ costs and benefits

false

opportunity costs are not found in account records because they aren't relevant to decisions

-avoiding more fixed costs than the company loses in contribution margin -overall increase in net operating income

potential advantages of dropping a product line or other segment include:

subcontracting some of the processing that would be done in that area focusing business process improvement efforts on the bottleneck

the capacity of a bottleneck can be effectively increased by

allocated common fixed costs

which of the following can make a product line look less profitable than it really is?

joint

costs incurred up to the split-off point in a process in which 2 or more products are produced from a common input are called ______ costs

sunk cost

costs that have already been incurred and cannot be avoided regardless of what a manager decides to do are _____ costs

opportunity cost

if a company has a resource that could be used for something else, the _____ cost is the profit that could be derived from the best alternative use of the resource

the profit from the best alternative use of the resource

if a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is:

$3 per minute. CM of $15/5 mins of labor time= $3 per minute

Product ABC has a contribution margin per unit of $10.00. Each unit of ABC requires 5 minutes of machine time and 10 minutes of labor time. Product XYZ has a contribution margin per unit of $15.00 and each unit requires 10 minutes of machine time and 5 minutes of labor time. If the company's constraint is labor hours, the contribution margin per unit of constraint for Product XYZ is

sell or process further decision

deciding what to do with a joint product at the split-off point is a(n) ___ or _______ decision

relevant benefit

differential revenue is an example of a(n) ______ benefit

define the alternatives

first step in decision making is to

-future costs that don't differ between alternatives -sunk costs

irrelevant costs include:

-irrelevant costs may be used incorrectly in the analysis -all info needed for the total cost is rarely available -critical info may be overlooked with the total cost approach

isolating relevant costs is desirable because

are not relevant

joint costs incurred prior to the split-off point ___ relevant in decisions regarding what to do from the split off point forward

incremental revenue after split off exceeds the incremental processing cost after split off

joint product should be processed after split-off if the:

opportunity cost

the potential benefit given up when selecting one alternative over another is a(n) _____ cost

joint products

the split-off point is the point in the manufacturing process at which the ___ products can be recognized as separate products

improvements should focus on the constraint efforts should be focused on the weakest link

to effectively deal with a constraint

the weakest link

to increase the strength of the chain, efforts should be concentrated on strengthening

joint products

two or more products that are produced from a common input are known as ___ products

constraint

when a shortage or limited resource of some type restricts a company's ability to satisfy demand, the company has a

there must be idle capacity normal sales must not be affected

when considering accepting a special order

volume trade off decisions

when demand for products exceeds the production capacity, a ____ decision must be made

it's profitable when the incremental revenue exceeds the incremental processing cost

when is it profitable to continue processing a joint product after the split off point?

relevant costs and benefits

when making a decision only ____ costs and benefits should to be included in the analysis

-incremental cost -avoidable cost

when making a decision to either buy a movie ticket or rent a DVD, the cost of the movie ticket is an example of a(n) __ cost

original cost of the car

when planning a trip an deciding whether to drive or fly, the ___ is a sunk cost and should be ignored