Managerial Accounting Chapter 6

Front 1

Differential Cost (Revenue)

Back 1

The difference in total cost or revenue between ttwo alternatives

Front 2

Incremental Cost

Back 2

Another term for differntial cost when one alternative includes all the costs of the other plus some additional costs

Front 3

Outlay Cost

Back 3

A cost that requires a future cash disbursement

Front 4

Opportunity Cost

Back 4

The maximum available contribution to profit forgone (or passed up) by using limited resources for a particular purpose

Front 5

Joint Products

Back 5

Two or more manufactured products that (1) have relatively significant sales values and (2) are not separately identifiable as individual products until their split-off point

Front 6

Separable Costs

Back 6

Any cost beyond the split-off point

Front 7

Joint Costs

Back 7

The costs of manufacturing joint products prior to the split-off point

Front 8

Deprecitaion

Back 8

The periodic cost of equipment that a company spreads over the future periods in which the company will use the equipment

Front 9

Book Value (Net Book Value)

Back 9

The original cost of equipment less accumulated depreciation

Front 10

Accumulated Depreciation

Back 10

The sum of all depreciaiton charged to past periods

Front 11

Sunk Cost

Back 11

A historical or past cost, that is, aa cost that the company has already incurred and, therefore, is irrelevant to the decision-making process

Front 12

Absorption Approach

Back 12

A costing approach that considers all indirect manufacturing costs (both variable and fixed) to be product (inventoriable) costs that become an expense in the form of manufacturing costs of goods sold only as sales occur

Front 13

Contribution Approach

Back 13

A method of internal (managerial accounting) reporting that emphasized the distinction between variable and fixed costs for the purpose of better decision making