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16 Cards in this Set
- Front
- Back
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ROI is best used as a balance score card. True/False
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True
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A manager evaluated based on ROI may reject investment opportunities that are profitable for the whole company but that would receive a negative impact on the managers performance evaluation. True/False
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True
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the net operating income that an investment center earns above the minimum required return on its operating assets.
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residual income
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The ------ approach encourages managers to make investments that are profitable for the entire company by that would be rejected by managers who are evaluated using the ------ formula
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residual income approach, ROI formula
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A cost that differs between alternatives
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relevant costs
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a cost that can be eliminated in whole or in part by choosing on alternative over another.
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avoidable cost
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any cost thtat differs between alternatives in a diecisoin making situation
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differential cost
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what is one of the great dangers in allocating common fixed costs.
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it can make a product line look less profitable that it really is
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a decision to carry out one of the activites in the value chain internally, rather than to buy externally from a supplier
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make or buy decision
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a one time order that is not considered part of the company's normal ongoing business.
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special order
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In general, a special order is profitable if the incremental revenue from the special order exceeds the incremental costs of the order. True/Fals
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True
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When a limited resource of some type restricts the company's ability to satisfy demand, the company has a,
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constraint.
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---------- costs are usually unaffected by constraint chioces so the course of action that will maximze the company's ----------- should ordinarily be selected
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Fixed Costs, Contribution margin
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Two or more products that are produced from a common input are known as
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joint products
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-------- are irrelevant in decisions regarding what to do with a product from the split off point forward
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joint costs
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It is profitable to continue processing a joint product after the split off point as long as the incremental revenu exceeds the incremental processing cost incurred after split off. True/ False
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True
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