Chapter 7 vocab and concepts

Question 1

decision alternatives?

Answer 1

the determination of possible solutions

Question 2

relevant costing?

Answer 2

The costs that change or differ between the decision alternatives are relevant for decision making.

Question 3

irrelevant costing?

Answer 3

hose that will not influence a decision, either because they have already been incurred or because they do not differ between the decision alternatives.

Question 4

sunk costs?

Answer 4

amounts that were incurred in the past, are not relevant because they will not change based on a future decision.

Question 5

opportunity costs?

Answer 5

The lost opportunity of choosing one decision alternative over another.

Question 6

capacity?

Answer 6

is a measure of the limit based on a specified resource.

Question 7

four common managerial decisions?

Answer 7

special Order, Make or buy, Keep or drop, Sell or process.

Question 8

outsourcing decisions?

Answer 8

whether to perform an activity or function in-house or purchase it from an outside supplier.

Question 9

continue or discontinue decision?

Answer 9

If a segment of a bussness is not performing well or is not meeting expectations, manegers may decide to eliminate it.

Question 10

differential costs?

Answer 10

costs that will change based on the decision made.