ACCNT 2020
irrelevant in decisions regarding what to do with a product after split off
joint costs are
sunk cost
costs that have already been incurred and cannot be avoided regardless of what a manager decides to do are _____ costs
the profit from the best alternative use of the resource
if a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is:
-avoiding more fixed costs than the company loses in contribution margin -overall increase in net operating income
potential advantages of dropping a product line or other segment include:
subcontracting some of the processing that would be done in that area focusing business process improvement efforts on the bottleneck
the capacity of a bottleneck can be effectively increased by
joint products
the split-off point is the point in the manufacturing process at which the ___ products can be recognized as separate products
improvements should focus on the constraint efforts should be focused on the weakest link
to effectively deal with a constraint
the weakest link
to increase the strength of the chain, efforts should be concentrated on strengthening
constraint
when a shortage or limited resource of some type restricts a company's ability to satisfy demand, the company has a
there must be idle capacity normal sales must not be affected
when considering accepting a special order
volume trade off decisions
when demand for products exceeds the production capacity, a ____ decision must be made
allocated common fixed costs
which of the following can make a product line look less profitable than it really is?
relevant costs and benefits
when making a decision only ____ costs and benefits should to be included in the analysis
joint products
two or more products that are produced from a common input are known as ___ products
it's profitable when the incremental revenue exceeds the incremental processing cost
when is it profitable to continue processing a joint product after the split off point?
-incremental cost -avoidable cost
when making a decision to either buy a movie ticket or rent a DVD, the cost of the movie ticket is an example of a(n) __ cost
original cost of the car
when planning a trip an deciding whether to drive or fly, the ___ is a sunk cost and should be ignored
contribution margin
a business segment should only be dropped if a company can avoid more in fixed costs than it gives up in:
make or buy decision
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(n) _____ or ________ decision
special order
a one-time sale that isn't considered part of the company's normal ongoing business is referred to as
vertical integration
being less dependent on suppliers and making profits on both parts and the final product are advantages of __________
Irrelevant costs and benefits
costs and benefits that should be ignored when making decisions are called ____ costs and benefits
false
opportunity costs are not found in account records because they aren't relevant to decisions
joint
costs incurred up to the split-off point in a process in which 2 or more products are produced from a common input are called ______ costs
opportunity cost
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
$3 per minute. CM of $15/5 mins of labor time= $3 per minute
Product ABC has a contribution margin per unit of $10.00. Each unit of ABC requires 5 minutes of machine time and 10 minutes of labor time. Product XYZ has a contribution margin per unit of $15.00 and each unit requires 10 minutes of machine time and 5 minutes of labor time. If the company's constraint is labor hours, the contribution margin per unit of constraint for Product XYZ is
sell or process further decision
deciding what to do with a joint product at the split-off point is a(n) ___ or _______ decision
relevant benefit
differential revenue is an example of a(n) ______ benefit
define the alternatives
first step in decision making is to
-future costs that don't differ between alternatives -sunk costs
irrelevant costs include:
-irrelevant costs may be used incorrectly in the analysis -all info needed for the total cost is rarely available -critical info may be overlooked with the total cost approach
isolating relevant costs is desirable because
are not relevant
joint costs incurred prior to the split-off point ___ relevant in decisions regarding what to do from the split off point forward
incremental revenue after split off exceeds the incremental processing cost after split off
joint product should be processed after split-off if the:
opportunity cost
the potential benefit given up when selecting one alternative over another is a(n) _____ cost