acct 6
joint costs
Costs incurred up to the split-off point in a process in which two or more products are produced from a common input
When making a volume-trade off the decision, managers should ignore
fixed costs
A business segment should only be dropped if a company can save more in
fixed costs than it loses in contribution margin
which of the following can make a product line look less profitable than it really is
Allocated common fixed costs
A business segment should only be dropped if a company can avoid more in fixed costs than it gives up in:
contribution margin
The first step in decision making is to:
define the alternatives
A future cost that is not the same between any two alternatives is known as a(n)
differential cost
Depreciation of existing assets is relevant to decisions
false
Some decisions only have one alternative.
false
When making a product line decision, a company may focus on lost contribution margin and avoidable fixed costs or prepare comparative
income statement
When there is a constrained resource, the best way to increase profits is to:
increase the capacity of the bottleneck
The potential benefit given up when selecting one alternative over another is a(n)
oppunity cost
Costs and benefits that always differ between alternatives are
revanlent cost
A cost that has already been incurred and cannot be avoided regardless of what a manager decides to do is referred to as a(n)
sunk cost
When a constraint exists, companies need to focus on maximizing
total contribution margin
Being less dependent on suppliers and making profits on both parts and the final product are advantages of
vertical integration
The total cost approach and the differential approach methods of decision analysis
will always provide the same correct answer.
intermediate products
As it applies to sell or process further decisions, which term refers to a product that is in the process of being made