chapter 17

Question 1

relevant costs

Answer 1

Future costs that differ
among competing
decision alternatives

Question 2

irrelevent costs

Answer 2

Future costs that DO NOT
differ among competing
decision alternatives

Question 3

sunk costs

Answer 3

Result from past decisions that cannot be
changed
▪ Sunk costs are NEVER relevant

Question 4

disposal value

Answer 4

Amount of cash an old asset can be sold for at the
time the new asset is purchased

Question 5

salvage value

Answer 5

Amount of cash an asset will bring at the end of its
useful life if held to that time

Question 6

relevant cash inflow

Answer 6

▪ Obtained only if the replacement alternative is
accepted

Question 7

opportunity costs

Answer 7

Any benefit forgone as a result of rejecting
one alternative in favor of another
▪ Always relevant when making decisions
among competing
alternatives

Question 8

differential analysis

Answer 8

▪ An approach to the analysis of relevant
costs that focuses on costs that differ
between alternative actions
▪ Preferred over an aggregate analysis when
determining which of two alternatives is
most profitable

Question 9

special order

Answer 9

Occurs when a customer wants to buy
merchandise or obtain services on a “one time”
basis at a “special” price

Question 10

outsourcing

Answer 10

Outsourcing is the procurement of services,
products, components from an external source.