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Flashcards in Topic 7 Deck (27)
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1
Q

Relevant costs are expected ______ costs.

A

future

2
Q

Relevant revenue are expected ______ revenue

A

future

3
Q

Manager can analyze the data in ______ ways: by considering “all costs and revenues” or considering “ relevant cost and revenues”

A

two

4
Q

Historical costs themselves are past costs that, therefore, are _________ to decision making.

A

irrelevant

5
Q

Past costs are also called sunk costs because they are ________ and cannot be changed no matter what action is taken.

A

unavoidable

6
Q

Managers divide the outcomes of decisions into _____ broad categories: quantitative and qualitative.

A

two

7
Q

Quantitative factors are outcomes that are measured in ___________.

Some quantitative factors are financial; they can be expressed in monetary terms. Other quantitative factors are nonfinancial; they can be measured numerically, but they are not expressed in monetary terms

A

numerical terms

8
Q

Qualitative factors are outcomes that are ________ to measure accurately in numerical terms.

A

difficult

9
Q

Relevant-cost analysis generally emphasizes _____________ factors that can expressed in financial terms.

A

quantitative

10
Q

Although qualitative factors and quantitative nonfinancial factors are difficult to measure in financial terms, they are _______ for managers to consider.

A

important

11
Q

RELEVANT COSTS

  • Opportunity cost
  • Variable cost
  • Incremental cost
  • __________ cost
A

Avoidable

12
Q

NON RELEVANT COSTS

  • _______ cost
  • Commited cost
  • Non cash flow ( eg depreciation)
  • Fixed overhead absorbed
A

Sunk

13
Q

A relevant cost has three qualities:

  1. Future
  2. Cash flow
  3. __________
A

Incremental

14
Q

idle time is ________ cost

A

irrelevant

15
Q

Incremental cost - the ________ total cost incurred for an activity

A

additional

16
Q

Differential cost - the difference in total cost between ________ alternatives.

A

two

17
Q

Incremental Revenue - the additional total revenue from ______ activity

A

an

18
Q

Differential Revenue - the difference in total revenue between ______ alternatives.

A

two

19
Q

Opportunity Cost - the benefit ________ through the acceptance of one decision over another

A

foregone

20
Q

Special Order Pricing: Accept/Reject

Decision rule:

Accept if: ________ revenue > __________ costs

A

Incremental

incremental

21
Q

Outsourcing => Make or Buy Decision

Decision Rule:

In deciding whether to accept the outside supplier’s offer, we need to isolate the part by ___________:

  • The sunk costs
  • The future costs that will not differ between making or buying the parts
A

eliminating

22
Q

Opportunity costs are not recorded in _______ accounting system. Because historical record keeping is limited to transactions involving alternatives that managers actually selected rather than alternatives that they rejected.

A

financial

23
Q

The relevant cost of any alternative is (1) the ____________ of the alternative plus (2) the opportunity cost of the profit forgone from choosing that alternative.

A

incremental cost

24
Q

Product-mix decision: decision managers make about which products to sell and in what quantities. The decisions usually have only a short-run focus because they typically arise in the context of ___________ that can be relaxed in the long run.

A

capacity constraints

25
Q

To detrmine product mix, managers maximize ___________ , subject to constraints such as capacity and demand.

A

operating income

26
Q

Avoidable costs include variable costs and _______ fixed costs

A

specific

27
Q

Margin of safety: the ________ between the budgeted and the breakeven level of activity. It may be stated: in units or as a percentage to budgeted units

A

difference