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19 Cards in this Set

  • Front
  • Back

Fixed expense that can’t be directly traced to individual segments and is unaffected by the elimination of any segment

Common fixed expense

Mathematical expression that expresses resource limits

Constraints

Specific set of procedures that produces a decision when followed

Decision model

Difference in TC b/t alternatives in decision

Differential cost

Fixed cost that is directly traceable to given segment and is gone when segment is eliminated

Direct fixed cost

Products that are inseparable prior to split-off point; all Manuf costs up to split-off are joint costs

Joint products

Relevant costing analysis that focuses on keeping or dropping segment of business

Keep-or-drop decision

Relevant costing analysis that focuses on whether a component should be made or bought

Make-or-buy decision

Percent applied to base cost; inc. desired prof and any cost not in base cost

Markup

Benefit given up or sacrificed when one alternative is chosen over another

Opportunity cost

Future cost that varies across alternatives

Relevant cost

Company’s subunit that’s of sufficient importance to warrant production of performance reports

Segment

Contribution a segment makes to cover common FC and provide for profit after DFC and VC are deducted from segment revenue

Segment margin

Relevant costing analysis that focuses on whether a product should be processed beyond split-off point

Sell-or-process-further decision

Relevant costing analysis that focuses on whether a specially priced order should be accepted or rejected

Special-order decision

Point at which products become distinguishable after passing through a common process

Split-off point

Costs for which the outlay has already been made and that can’t be affected by future decision

Sunk cost

Difference b/t sales price needed to achieve projected market share and desired per-unit profit

Target cost

Method of determining cost of product or service based on price that customers are willing to pay

Target costing