acct 6

joint costs

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

When making a volume-trade off the decision, managers should ignore

fixed costs

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

fixed costs than it loses in contribution margin

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

Allocated common fixed costs

A business segment should only be dropped if a company can avoid more in fixed costs than it gives up in:

contribution margin

The first step in decision making is to:

define the alternatives

A future cost that is not the same between any two alternatives is known as a(n)

differential cost

Depreciation of existing assets is relevant to decisions

false

Some decisions only have one alternative.

false

When making a product line decision, a company may focus on lost contribution margin and avoidable fixed costs or prepare comparative

income statement

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

increase the capacity of the bottleneck

The potential benefit given up when selecting one alternative over another is a(n)

oppunity cost

Costs and benefits that always differ between alternatives are

revanlent cost

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

sunk cost

When a constraint exists, companies need to focus on maximizing

total contribution margin

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

vertical integration

The total cost approach and the differential approach methods of decision analysis

will always provide the same correct answer.

intermediate products

As it applies to sell or process further decisions, which term refers to a product that is in the process of being made