Matching Key Terms and Concepts to DefinitionsA number of terms and concepts from this cha...

1.

Excess capacity.

(a) Short-term management decision made using differential analysis.

2.

Identify the decision problem.

(b) Management decision in which lost revenue is compared to the reduction of costs to determine the overall effect on profit.

3.

Constrained resource.

(c) Exists when a company has not yet reached the limit on its resources.

4.

Special-order decision.

(d) Costs that have already been incurred.

5.

Differential costs.

(e) Management decision in which fixed manufacturing overhead is ignored as long as there is enough excess capacity to meet the order.

6.

Evaluate the costs and benefits of alternatives.

(f) Costs that can be avoided by choosing one option over another.

7.

Make-or-buy decision.

(g) Step 5 of the management decision-making process.

8.

Sunk costs.

(h) Management decision in which relevant costs of making a product internally are compared to the cost of purchasing that product.

9.

Opportunity costs.

(i)Cost that is relevant to short-term decision making

10.

Keep or drop decision.

(j) Resource that is insufficient to meet the demands placed on it.

11.

Full capacity.

(k) First step of the management decision-making process.

12.

Avoidable costs.

(l) Costs that are always irrelevant to management decisions.

(m) Exists when a company has met its limit on one or more resources.

(n) Benefits given up when one alternative is chosen over another.

(o) Costs that change across decision alternatives.

(p) Step 3 of the management decision-making process.