1.
Allocated, Assigned, Common cost: A cost that cannot be traced directly to a cost object, but is instead incurred to support operations as a whole.
2.
Avoidable costs: costs that occur only with the implementation of a particular alternative.
3.
Bottle-neck process: The process that limits total output.
4.
Incremental analysis: this kind of analysis helps decision makers understand the impact of their choices.
5.
Information overload: A phenomenon where an excessive amount of information available to a manager hinders decision making.
6.
Make-or-buy decision: where a company is making the decision to choose whether to make the part internally or buy it externally.
7.
Offshoring: moving a company's business processes to a foreign country
8.
Opportunity cost: the contribution margin of the next best alternative use of the facilities.
9.
Outsourcing: moving the production of goods or the delivery of services from within the organization to a provider outside the organization.
10.
Relevant information: Meets two criteria:
1) it differs between the alternatives(it is differential)
2) the differences will occur in the future.
11.
segment margin: the contribution margin of a particular segment - any direct fixed costs
12.
segments: business units
13.
Sunk cost: represents a cost that has been incurred in the past.
14.
Theory of Constraints: developed to maximize the performance of a value chain by focusing on constraints that limit an organization's output.
15.
Throughput contribution: sales revenue - direct materials cost
16.
Unavoidable costs: incurred under all alternatives; thus they are irrelevant.
