Chapter 10

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one of the benefits of dropping a product line is that a company can eliminate the products lines

avoidable fixed costs

When dealing with a constrained resource, managers should focus their attention on managing the

bottleneck

the machine or process that is limiting overall output is called

bottleneck

when a limited resource of some type restricts a company's ability to satisfy demand, the company has a

constraint

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

special order decision

which of the following can make a product line look less profitable than it really is?

...

a business segment should only be dropped if a company can save more in

fixed costs, than it loses in contribution margin

bad decisions can easily result from erroneously including

irrelevant costs and benefits when analyzing alternatives

costs incurred up to the split-off point in a priceless in which two or more products are produced from a common input are called

joint costs

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

sunk cost

in a make or buy decision, the company should decide to buy if:

the purchase price is less than the variable cost + the avoidable fixed costs of production

when making decisions, manners should ignore

unavoidable costs

costs that differ between alternatives are called

relevant costs

cost that can be eliminated by choosing one alternative over another

avoidable cost

which of the following is a cost that can be eliminated in whole or in part by choosing one alternative over another

avoidable cost

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

joint products

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

make or buy decision

if some products must be cut back because of a

produce the products with the highest contribution margin per unit of construed resource

which of the following should a company consider when making a decision?

relevant costs and benefits

only those costs and benefits that differ in total between alternatives are

relevant in a decision

deciding what to do with a joint product at the split-off point is a

sell or process further decision

deciding what to do with a joint product at the split-off point is called a

sell or process further decision


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