Cours 3 Flashcards
1
Q
What is incremental income?
A
- It is used when choosing between two options.
- It corresponds to the difference between the income of the two options.
-It highlights the impact on income when making a decision.
2
Q
What is a relevant cost?
A
- They are costs and revenues that differ for each alternative.
- They are costs and revenues that will occur in the future.
3
Q
What are opportunity costs?
A
It is the cost of giving up the opportunity to benefit from another action.
4
Q
What are sunk costs?
A
They are costs that have already been incurred and will not be changed or avoided by any future decision. Sunk costs are never considered to be relevant costs.
5
Q
What is a direct fixed cost?
A
- They are costs that can be specifically associated with an organizational unit, cost center, or cost object.
- If a resource is consumed by a single cost center or cost object, the resource is fully signed to that cost center or object.
- In theory, this cost disappears if the production of a cost object is stopped or if a cost center is closed.
6
Q
What is an indirect fixed cost?
A
- They are costs shared by multiple entities, cost centers, or objects.
- In other words, these are resources shared by multiple cost objects (multiple products) or multiple cost centers.
- This cost is typically not affected by stopping production of a cost object or closing (shutting down) a cost center.
7
Q
When does an opportunity cost occurs?
A
It happens when you give up some units of regular orders to comply with a shortfall.
8
Q
What are the relevant costs?
A
- Variable costs
- Direct fixed costs
- Opportunity costs
9
Q
What are non-relevant costs?
A
- Fixed costs already incurred
- variable costs incurred for regular orders
10
Q
Give an example of qualitative information to consider in an analysis.
A
Quantity, employees, suppliers, customers, or financing
