Chapter 4 Flashcards

Fundamentals of Cost Analysis for Decision Making (21 cards)

1
Q

Process of estimating revenues and costs of alternative actions available to decision makers and of comparing these estimates to the status quo.

A

differential analysis

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2
Q

Period of time over which capacity will be unchanged, usually one year.

A

short run

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3
Q

With two or more alternatives, costs that differ among or between alternatives.

A

differential costs

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4
Q

Cost incurred in the past that cannot be changed by present or future decisions.

A

sunk cost

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5
Q

Sum of all costs of manufacturing and selling a unit or product (includes both fixed and variable costs).

A

full cost

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6
Q

Order that will not affect other sales and is usually a short-run occurrence.

A

special order

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7
Q

department provides cost reports to the marketing department, which then adds appropriate markups to determine benchmark or target prices for all products the firm normally sells.

A

Cost-plus - the accounting

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8
Q

Time from initial research and development to the time that support to the customer ends. (cradle to-grave costing)

A

product life cycle

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9
Q

Price based on customers’ perceived value for the product and the price that competitors charge.

A

target price

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10
Q

Equals the target price minus desired profit margin.

A

target cost

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11
Q

Practice of setting price below cost with the intent to drive competitors out of business

A

Predatory pricing

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12
Q

Exporting a product to another country at a price below domestic price.

A

Dumping

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13
Q

Agreement among business competitors to set prices at a particular level.

A

Price-fixing

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13
Q

Practice of selling identical goods to different customers at different prices.

A

Price discrimination

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14
Q

Practice of setting prices highest when the quantity demanded for the product approaches capacity.

A

Peak-load pricing

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15
Q

Decision concerning whether to make needed goods internally or purchase them from outside sources.

A

Make-or-buy decision

16
Q

Activities, resources, or policies that limit or bound the attainment of an objective.

17
Q

Contribution margin per unit of a particular input with limited availability.

A

Contribution margin per unit of scarce resource

18
Q

Focuses on revenue and cost management when faced with bottlenecks.

A

The theory of constraints

19
Q

Operation where the work required limits production.

20
Q

Sales dollars minus direct materials costs and variables such as energy and piecework labor.

A

Throughput contribution