ACC 202 CH 12

Two or more products produced from a common input are called

Joint products

Sell or process further decision

Decision as to whether a joint product should be sold at the split off point

Make or buy decision

Decision concerning whether an item should be produced internally or purchased from an outside supplier

The point in the manufacturing process where each joint product can be recognized as a separate product is called the

Split off point

Should production and sale of racing bikes be discontinued?

TAKE OUT AVOIDABLE COSTS --advertising, salaries, etc

Relevant benefit

benefit that differs between alternatives

The machine or process that is limiting overall output is called the_____________ - it is the constraint.

bottleneck

When a limited resource of some type restricts the company's ability to satisfy demand, the company is said to have a

constraint

Relevant cost

cost that differs between alternatives

Avoidable cost

is a cost that can be eliminated, in whole or in part, by choosing one alternative over another. Avoidable costs are relevant costs. Unavoidable costs are irrelevant costs.

special order

is a one-time order that is not considered part of the company's normal ongoing business

opportunity cost

is the benefit that is foregone as a result of pursuing some course of action.