Marginal Analysis Flashcards
1
Q
Presumed Excess capacity
A
price > VC/unit
2
Q
Presumed Full Capacity
A
Price > VC/unit + OC/unit
3
Q
OC/Unit
A
CM Give up/ units in special order
4
Q
Make VS Buy Decision Rule
A
make if relevant costs < outside purchase price
5
Q
Make/Buy Excess Capacity
A
Relevant Costs = Avoidable costs
6
Q
Make/Buy No excess capacity
A
Relevant costs = available cost + oC
7
Q
Sell or Process Further Decision Rule
A
Process further if incremental revenue > incremental cost
8
Q
Lost CM
A
cost to give up
9
Q
Keep or Drop Segment
A
Keep if lost CM > avoided fixed costs
Drop if lost CM < benefit
