Is this relevant?

Question 1

What are incremental costs?

Answer 1

(differential costs) difference in total between two decision alternatives. ex. between going to school or going to work.

Question 2

With idle capacity, what costs need to be covered?

Answer 2

only avoidable costs (Dm, DL, and avoidable fixed costs)

Question 3

What costs should be considered relevant for a make or buy decision?

Answer 3

any new revenues and AVOIDABLE costs (costs that go away when accepting the decision to buy)

Question 4

What items should be considered for a special order decision if there is no excess capacity to fill the order

Answer 4

sales revenue, avoidable/variable costs of producing the order, and the opportunity cost of not providing the special order need to be considered.

Question 5

what items should be considered for a special order decision if there is excess capacity

Answer 5

only sales revenue and the avoidable variable costs of producing the order

Question 6

Transfer price equation

Answer 6

transfer price per unit = additional outlay cost per unit + opportunity cost per unit

Question 7

what are additional outlay costs

Answer 7

incremental production costs incurred by selling unit