Chapter 10
one of the benefits of dropping a product line is that a company can eliminate the products lines
avoidable fixed costs
When dealing with a constrained resource, managers should focus their attention on managing the
bottleneck
the machine or process that is limiting overall output is called
bottleneck
when a limited resource of some type restricts a company's ability to satisfy demand, the company has a
constraint
a one-time order that is not considered part of the company's normal ongoing business is referred to as a
special order decision
which of the following can make a product line look less profitable than it really is?
...
a business segment should only be dropped if a company can save more in
fixed costs, than it loses in contribution margin
bad decisions can easily result from erroneously including
irrelevant costs and benefits when analyzing alternatives
costs incurred up to the split-off point in a priceless in which two or more products are produced from a common input are called
joint costs
A cost that has already been incurred and cannot be avoided regardless of what a manager defies to do is referred to as a
sunk cost
in a make or buy decision, the company should decide to buy if:
the purchase price is less than the variable cost + the avoidable fixed costs of production
when making decisions, manners should ignore
unavoidable costs
costs that differ between alternatives are called
relevant costs
cost that can be eliminated by choosing one alternative over another
avoidable cost
which of the following is a cost that can be eliminated in whole or in part by choosing one alternative over another
avoidable cost
two or more products that are produced from a common input are known as
joint products
A decision to carry out one of the activities in the value chain internally, rather than to buy externally from a supplier called a
make or buy decision
if some products must be cut back because of a
produce the products with the highest contribution margin per unit of construed resource
which of the following should a company consider when making a decision?
relevant costs and benefits
only those costs and benefits that differ in total between alternatives are
relevant in a decision
deciding what to do with a joint product at the split-off point is a
sell or process further decision
deciding what to do with a joint product at the split-off point is called a
sell or process further decision
