A306 Chp.6
Which of the following should not be included in the analysis when making a decision?
Sunk costs Non-differential future costs
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. avoidable sunk incremental irrelevant
avoidable incremental
To maximize total contribution margin when a constrained resource exists, produce the products with the:
highest contribution margin per unit of the constrained resource
Costs and benefits that always differ between alternatives are ______ costs and benefits.
relevant
If a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is:
the profit from the best alternative use of the resource
When considering accepting a special order:
there must be idle capacity normal sales must not be affected
True or false: Depreciation of existing assets is relevant to decisions.
False
The key to effective decision making is:
differential analysis
Irrelevant costs include:
future costs that do not differ between alternatives sunk costs