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Cost Acct. Ch.10 Def
| Term | Definition |
|---|---|
| ad hoc discount | a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased |
| differential cost | a cost that differs in amount among the alternatives being considered |
| differential revenue | a revenue that differs in amount among alternatives being considered |
| incremental cost | the cost resulting from the production or sale of an additional contemplated quantity of output |
| incremental revenue | the revenue resulting from an additional contemplated sales quantity; a cost that must be allocated or assigned to products or services because of its non-traceability |
| linear programming (LP) | a method of mathematical programming used to solve a problem that involves an objective function and multiple limiting factors or constraints |
| make-or-buy decision | a decision that compares the cost of internally manufacturing a component of a final product (or providing a service function) with the cost of purchasing it from outside suppliers (outsourcing) or from another division of the company at a specified trans |
| mathematical programming | a variety of techniques used to allocate limited resources among activities to achieve a specific objective |
| offshoring | an outsourcing of jobs formerly performed in the home country to foreign countries |
| opportunity cost | a potential benefit that is forgone because one course of action is chosen over another |
| outsourcing | the use, by one company, of an external provider of a service or manufacturer of a component |
| outsourcing decision | see make-or-buy decision |
| relevant costing | a process that compares, to the extent possible and practical, the incremental revenues and incremental costs of alternative decisions |
| Robinson-Patman Act | a law that prohibits companies from pricing the same products at different amounts when those amounts do not reflect related cost differences |
| sales mix | the relative combination of the various products’ sales quantities that comprise a company’s total sales |
| scarce resource | a resource that is essential to production activity, but is available only in some limited quantity |
| segment margin | the excess of revenues over direct variable expenses and avoidable fixed expenses for a particular segment |
| special order decision | a situation in which management must determine a sales price to charge for manufacturing or service jobs outside the company’s normal production/service market |
| sunk cost | a cost incurred in the past and not relevant to any future courses of action; the historical or past cost associated with the acquisition of an asset or a resource |
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sfrase
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