BEC 4 M4 Marginal Analysis 2

Question 1

Relevant Costs in a decision analysis situation

Answer 1

1. Incremental cost
2. Opportunity cost
3. Avoidable cost

Question 2

At capacity, the min price for a special order is

Answer 2

the sum of variable costs of current utilization plus the contribution margin from the next best alternative

Question 3

improvement in operating income from elimination of an unprofitable product line

Answer 3

income-unavoidable costs+current operating loss

Question 4

Differential Cost

Answer 4

difference between contribution margin of alternative and current contribution margin

Question 5

Relevant Cost

Answer 5

costs that will change under different alternatives

Question 6

variable costs

Answer 6

costs that change wi increases or decreases in production

Question 7

Throughput costs

Answer 7

costs associated with conversion of resource into a finished product

Question 8

Costs relevant to a make-or-buy decision

Answer 8

variable labor, variable materials and avoidable fixed costs

Question 9

avoidable costs

Answer 9

synonym for relevant costs

Question 10

differential costs

Answer 10

synonym for relevant costs