Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Chapter 7 Accounting
| Question | Answer |
|---|---|
| Financial Data | information is related to revenues and costs and their effect on the company's overall profitability |
| NonfinancialN DAta | information relates to such factors as the effect of the decision on employee turnover, the environment, or the overall image of the company |
| Incremental analysis | The process of identifying the financial data that change under alternative courses of action |
| Relevant cost and revenues | only factors to be considered are those costs and revenues that differ across alternatives |
| Opportunity cost | the company must give up the opportunity to benefit from some other course of action |
| Sunk cost | Cost that have already been incurred and will not be changed or avoided by any present or future decisions |
| Types of Incremental Analysis | 1. Accept an order at a special price 2. Make or buy component parts or finished products 3. Sell products or process them further |
| The basic decision rule is to accept | the special order if the incremental price exceeds the incremental costs to complete the order |
| Describe the steps in the decsion-making process: | 1. Identify the problem and assign responsibility 2. Determines and evaluate possible course of aciton 3. Make a decision 4. Review results of the decision |
| Accountants are usually responsible for what 2 steps? | 2 and 4 |
| What are some qualitative factors to consider? | - decision to eliminate a line of business on existing employees and the community in which the plant is located - The cost savings that may be obtained |
| Activity Based Costing | all of the concepts in this chapter are based on "ABC" - It results in a more accurate allocation of overhead -Improved incremental analysis |
| Full Capacity (Reject or Accept) | special order is rejected |
| The special order woiuld have to be absorb | 1. Additional fixed manufacturing costs 2. Variable manufacturing costs |
| Make or Buy Decision | (Compare all the costs to make a product witht the costs to buy the product |
| THe opportunity cost always hoes in the ______ | Make column |
| What are the Additional Consideration for the Make- or- Buy Decisions? | - Buying may be the most economically feasible solution -Supplier's ability to satisfy the company's quality control |
| The Key to elimination decisions is to focus on: | - Relecant costs- the data that change under the alternatives courses of action |
| Remember that total NEt Income may decrease if a segment is elimination: | - Total fied costs will be the same whether or not the champ Line is discounted |
Created by:
JackyThrows
Popular Accounting sets