Accounting 2 Chapter 12 Notes

One of the benefits of dropping a product line is that a company can eliminate the product line's ________ fixed costs

Avoidable

When making a decision to continue using a current machine versus purchasing a new machine, what type of costs need to be included in the analysis

Relavent

Deciding what to do with a joint product at the split-off point is a ____ or ________ ________ decision.

Sell; Process further

which of the following should not be included in the analysis when making a decision?

Sunk costs and non-differential future costs

A cost that can be eliminated in whole or in part by choosing one alternative over another is a(n)...

Avoidable cost

When trying to decide if a particular cost is avoidable, irrelevant costs include...

Future costs that do not differ between alternatives and sunk costs

When the total amount of the cost will be the same regardless of the alternatives selected in a decision, what should be done about the cost in the decision analysis?

Ignore the cost

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

Make; buy

If a company has a resource that could be used for something else, the ________ cost is the profit that could be derived from the best alternative use of the resource.

Opportunity

The capacity of a bottleneck can be effectively increased by...

Working overtime on the bottleneck. Subcontracting some of the processing that would be done at the bottleneck. Investing in additional machines at the bottleneck. Shifting workers from processes that are not bottlenecks to the process that is the bottleneck. Focusing business process improvement efforts on the bottleneck. Reducing defective units. Each defective unit that is processed through the bottleneck and subsequently scrapped takes the place of a good unit that could have been sold.