CH 2 vocab Flashcards
Define Batch level cost
A cost that caries in proportion to the number of batches of units make ( used synonymously with step cost)
Define Controllable cost, controllable benefit
A cost or benefit that a decision maker chooses to incur relative to doing nothing.
Define Cost Hierarchy
The classification of cost into unit, batch, product, and facility level
Define Direct cost, direct benefit
A cost or benefit that is uniquely related to a decision option
Define Facility level cost
Cost that does not vary at the unit-batch, or product level. Cost required to sustain the organization
Define Fixed cost
A cost that does not change as the volume of activity changes.
Define Indirect cost, indirect benefit
A cost or benefit that is not unique to a decision option-only a portion relates to a decision option
Define mixed cost
A cost that contains both fixed and variable components
Define Overhead
The cost of capacity resources
Define Product level cost
A cost that varies in proportion to the number of products
Define Relevant cost, relevant benefit
A cost or benefit that differs across decision options
Define Step cost
A cost that increases in discrete steps as the volume of activity increases
Define sunk cost
A past expenditure that cannot be changed
Define Traceability
The degree to which we can directly relate a cost or revenue to decision option
Define unit level cost
A cost that increases or decreases in direct proportion to the number of units produced ( used synonymously with variable cost)
