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14 Cards in this Set
- Front
- Back
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Relevant information |
expected future data that differs among alternatives |
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Relevant cost |
cost that is relevant to a particular decision bc it is a future cost and differs among alternatives |
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Irrelevant cost |
cost that does not affect the decision because it is not in the future or does not differ among alternatives |
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Sunk Cost |
a cost that was incurred in the past and cannot be changed regardless of which future action is taken |
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Differential Analysis |
a method that looks at how operating income would differ under each decision alternative; leaves out irrelevant information |
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Price-Taker |
a company that has little control over the prices of its products and services bc its products and services are not unique and there is little competition Ex: food commodities, natural resources, generic customer products and services Target Pricing
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Price-Setter |
a company that has control over the prices of its products and services bc its products and services are unique and there is little competition Cost-Plus Pricing |
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Target Pricing |
a method to manage costs and profits by determining the target full product cost. Revenue at market price - desired profit |
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Target Full Production Cost |
The full cost to develop, produce, and deliver the product or service |
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Cost-plus pricing |
a method to manage costs and profits by determining the price Full product cost + desired profit = Cost-plus price |
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Constraint |
a factor that restricts production or sale of a product |
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Opportunity cost |
the benefit given up by not choosing an alternative course of action |
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Joint cost |
a cost production process that yields multiple products |
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keys to analyzing short-term special business decisions |
focus on relevant revenue, costs, and profits use contribution margin approach that separates variable costs from fixed costs |
