Final acc chptr 20 Flashcards
what are the steps in a managements decision making process
- identify the problem and assign responsibility
- determine and evaluate possible courses of action
- make a decision
- review results of the decision
what is financial information related to
revenues and costs and their effect on the companies overall profitibality
what is nonfinancial information related to
the effect of the decision on employee turn over, the environment, or the overall image of the company in the community
what is incremental analysis/ differential analysis
the process used to identify the financial data that changes under alternative courses of action
what are revelant costs and revenues
the only factors to be considered that differ across alternatives
what is a sunk cost
costs that have already been incured and will not be changed or avoided by an present or future decisions
what is oppertunity cost
the lost potential benefit
what is outsourcing
the decision to buy parts or services
what is the basic decision rule for sell or process further
process further as long as the incremental revenue from such processing exceeds the incremental process costing
what is a joint product
a product that produces multiple end products from a single raw material or common production process
isa sunk cost - provess cant be reversed ex- sour cream after milk
what is a joint cost
all costs incured prior to the point at which two products are separately identifiable
what is the basic decision rule of repair, retain,or replace equipment
the company should choose the option that results in the lowest cost(and thus the highest income) over the relevant time period
what is the key focus of eliminate unrpofitable segment or production
focus on the relevant costs- the data that change under the alternative courses of action
does the fixed cost we eliminate outweigh our contribution margin
