Duxbury Chapter 12

The costs incurred up to the split-off point in a process in which two or more products are produced from a common input are known as _______costs

Joint

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

Joint

Two or more products that are produced from a common input are known as ______ products

Joint

When should a special order be accepted?

When the incremental revenue from the special order exceeds the incremental costs of the order

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

are not

When a manager increases the capacity of a _______, it is called relaxing the constraint

bottleneck

Anything that prevents you from getting more of what you want is a

constraint

When a constraint exists, companies need to focus on maximizing

contribution margin per unit of constraint

The first step in decision making is to

define the alternatives

A future costs that is not the same between any two alternatives is known as a _________, incremental or avoidable costs

differential

The key to effective decision making is

differential analysis

When considering decision alternatives, only relevant costs are included when using the ______ ______ approach

differential cost

A business segment should only be dropped if a company can save more in _____costs than it loses in contribution margin

fixed

One of the great dangers in allocating common _______costs is that such allocations can make a product line look less profitable than it really is

fixed

When there is a constrained resource, the best way to increase profits is to:

increase the capacity of the bottleneck

Future costs and benefits that do not differ between alternatives are ______costs to the decision-making process

irrelevant

When deciding whether to drive your car or take a train to a destination, the costs for your car insurance and driver's license are

irrelevant costs

Joint cost are:

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

A decision to carry out one of the activities in the value chain internally rather than to buy externally from a supplier is a ___________ decision

make or buy

Which of the following should not be included in the analysis when making a decision? opportunity costs avoidable costs non-differential future costs sunk costs

non-differential future costs sunk costs

When considering accepting a special order

normal sales must not be affected there must be idle capacity

Space being used that would otherwise be idle has _______ cost of zero

opportunity

It is profitable to continue processing a joint product after the split-off point, so long as the incremental __________ from such processing exceeds the incremental processing cost incurred after the split- off point

revenue

Deciding what to do with a joint product at the split-off point is a _____ or ______ ______ decision

sell or process further decision

A one-time sale that is not considered part of the company's normal ongoing business is referred to as a _____ ______ decision

special order

A costs that has already been incurred and cannot be avoided regardless of what a manager decides to do is referred to as a ______costs

sunk

When considering decision alternatives, both relevant and irrelevant costs are included when using the ____ _____ approach

total cost

Being less dependent on suppliers and making profits on both parts and the final product are advantages of _____ _______

vertical integration

Which of the following techniques describe how a bottleneck should be managed

- Focus business process improvement efforts on the bottleneck - Find ways to increase the capacity of the bottleneck - Ensure there is minimal lost time at the bottleneck due to breakdowns and set ups

Ways to increase the capacity of a bottle neck:

- Investing in additional machines at the bottleneck - Shifting workers from processes that are not bottlenecks to the process that is bottle neck

Isolating relevant costs is desirable because

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

To effectively deal with a constraint

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

Which of the following may be an advantage of making a part rather than buying it?

-A smoother flow of parts and materials for production -Less dependence on outside suppliers

Synonyms for differential costs include _____________ costs

incremental and avoidable

When making a decision to either go to a movie or rent a DVD, the costs of the movie ticket is an example of a ________ costs

incremental and avoidable

When a product is past the split-off point, but is not yet a finished product, is called a ______ product

intermediate

Costs and benefits that should be ignored when making decisions are called _________costs and benefits

irrelevant

The potential benefit given up when selecting one alternative over another is a _____costs

opportunity

When planning a trip and deciding whether to drive or fly, the _____is a sunk cost and should be ignored

original cost of the car

When planning a trip and making a decision to drive or take the train, the costs of car repairs and maintenance is a _______ costs

relevant

Activities ranging from development to production to after-sales service are called a _____ _______

value costs

When a company is involved in more than one activity in the entire value chain, it is _______ _______

vertically integrated

When demand for products exceeds the production capacity, a ________ ________ - _________ decisions must be made

volume trade-off

When a resource, such as space in the factory, has no alternative use, its opportunity cost is:

zero