Chapter 12 Flashcards
1
Q
What is a relevant cost?
A
It differs between alternatives
2
Q
What is an avoidable cost?
A
It is a relevant cost that can be avoided
3
Q
What is an unavoidable cost?
A
It is an irrelevant cost such as sunk costs
4
Q
2 Steps to analyse relevant costs?
A
Eliminate irrelevant costs, and differ between leftovers as differential or avoidable
5
Q
When do we use vertical integration?
A
We use it when company has more than one product line
6
Q
What are some advantages of Vertical Integration?
A
Realize profits and better quality control
7
Q
What are relevant costs for special orders?
A
Incremental Costs and Benefits
8
Q
What are joint products?
A
A common input that gives 2 or more outputs
9
Q
How are Joint Costs allocated?
A
End Products via relative sales value of each product
