Chapter 10 Key Terms

Pregunta	Respuesta
Relevant Costing	A process that compares to the extent possible and practical the incremental revenues and incremental costs of alternative decisions.
Incremental Cost	The cost resulting from the production or sale of an additional contemplated quantity of output.
Incremental Revenue	The revenue resulting from an additional contemplated sales quantity a cost that must be allocated or assigned to products or services because of its non-traceability.
Ad Hoc discount	a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased.
differential cost	a cost that differs in amount among alternatives being considered.
Differential Revenue	A revenue that differs in amount among alternatives being considered.
Linear Programming (LP)	A method of mathematical programming used to solve a problem that involves an objective function and multiple limiting factors or constraints.
Make-or-Buy Decision	A decision that compares the cost of internally manufacturing a component of a final product (or providing a service function) with the cost of purchasing it from outside suppliers.
Mathematical Programming	A variety of techniques used to allocate limited resources among activities to achieve a specific objective.
Offshoring	An outsourcing of jobs formerly performed in the home country to foreign countries.
Opportunity Cost	A potential benefit that is forgone because one course of action is chosen over another.
Outsourcing	The use, by one company of an external provider of a service or manufacturer of a component.
Outsourcing Decision	Same as make-or-buy decision
Robinson-Patman Act	A law that prohibits companies from pricing the same products at different amounts when those amounts do not reflect related cost differences.
Sales Mix	The relative combination of the various products' sales quantities that comprise a company's total sales.
Scarce Resource	A resource that is essential to production activity, but is available only in some limited quantity.
Segment Margin	The excess of revenues over direct variable expenses and avoidable fixed expenses for a particular segment.
Special order Decision	A situation in which management must determine a sales price to charge for manufacturing or service jobs outside the company's normal production/service market.
Sunk Cost	A cost incurred in the past and not relevant to any future courses of action; the historical or past cost associated with the acquisition of an asset or a resource.
Common Expenses	Is expenses that will be incurred regardless of which product lines the companies has.

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