20047798
Description
Flashcards by Steven Allgood, updated more than 1 year ago
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Created by Steven Allgood
over 4 years ago
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| Question | Answer |
| Avoidable Cost | A cost that can be eliminated by choosing one alternative over another in a decision. This term is synonymous with Differential Cost and Relevant Cost. |
| Bottleneck | A machine or some other part of a process that limits the total output of the entire system. |
| Constraint | A limitation under which a company must operate, such as limited available machine time or raw materials, that restricts the company's ability to satisfy demand. |
| Differential Cost | A future cost that differs between any two alternatives. |
| Differential Revenue | Future revenue that differs between any two alternatives. |
| Incremental Cost | An increase in cost between two alternatives. |
| Joint Costs | Costs that are incurred up to the split-off in a process that produces joint products. |
| Joint Products | Two or more products that are produced from a common input. |
| Make or Buy Decision | A decision concerning whether an item should be produced internally or purchased from an outside supplier. |
| Opportunity Cost | A potential benefit that is given up when one alternative is selected over another. |
| Relaxing (or elevating) the Constraint | An action that increases the amount of a constrained resource. Equivalently, an action that increases the capacity of the bottleneck. |
| Relevant Benefit | A benefit that should be considered when making decisions. |
| Relevant Cost | A cost that should be considered when making a decision. |
| Sell or Process Further Decision | A decision as to whether a joint product should be sold at the split-off point or sold after further processing. |
| Special Order | A one-time order that is not considered part of the company's normal ongoing business. |
| Split-off Point | That point in the manufacturing process where some or all of the joint products can be recognized as individual products. |
| Sunk Cost | A cost that has already been incurred and that cannot be changed by any decision made now or in the future. |
| Vertical Integration | The involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales, and after-sales service. |
| Cost-plus Pricing | A pricing method in which a predetermined markup is applied to a cost base to determine the target selling price. |
| Economic Value to the Customer (EVC) | The price of a customer's best alternative (called the reference value) plus the value of that differentiates a product that alternative (called the differentiation value). |
| Markup | The difference between the selling price pf a product or service and its cost. The markup is usually expressed as a percentage of cost. |
| Price Elasticity of Demand | A measure of the degree to which a change in price affects the unit sales of a product or service. |
| Target Costing | The process of determining the maximum allowable cost for a new product and then developing a prototype that can be profitably made for that maximum target cost figure. |
| Value-based Pricing | A pricing method in which a company establishes selling prices based on the economic value of the benefits that their products and services provide to customers. |
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