Term
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Definition
Controllable benefits and Cost.
The incremental revenues and expenditures relative to current revenues and expenditures or the status quo. |
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Term
| Noncontrollable Cost and Benefits |
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Definition
| Cost and benefits that are not changed by offering a new option. They are constant and fixed. |
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Term
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Definition
Relevant Cost and Benefits
Are controllable cost and benefits that differ between different options |
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Term
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Definition
| Cost that will not be affected by decisions that are made currently |
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Term
| The Horizon of a decision |
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Definition
| This affects if a decision is controllable or non controllable depending on the length of the decision. Short or long. |
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Term
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Definition
| Cannot control the level of cost related to your typical fixed cost. Cannot change capacity. |
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Term
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Definition
| When a firm is able to change it's capacity. Thus a company can control and alter their ability to deliver products or services in the long term |
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Term
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Definition
| How an activity influences the costs and benefits. The relationship between a cost or a benefit and an activity. |
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Term
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Definition
| The degree to which we can directly relate a cost or benefit to a specific option. |
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Term
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Definition
| proportional to the volume of the activity. |
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Term
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Definition
| Does not change as the volume of the activity changes. |
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Term
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Definition
| Contains both fixed and variable elements |
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Term
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Definition
| number of units sold times price of item. proportional to sales volume. |
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Term
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Definition
| These cost go up as more units are sold. |
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Term
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Definition
| The cost of producing one more additional unit |
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Term
| Direct benefit and Indirect Benefit |
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Definition
Direct - the revenue received from selling a unit.
Indirect- an example if you sell one item and this makes them want to buy something else from you |
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Term
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Definition
Direct- the resources and labor that went directly into a product.
Indirect- Salaries, cost of repairs and so on... also known as common cost. indirect cost in manufacturing are known as overhead. |
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Term
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Definition
Unit
Batch
Product
Facility-level |
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Term
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Definition
| Stay at the same level for a certain activity range but jump to a higher amount if the volume of activity increase beyond this range |
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Term
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Definition
| increase or decrease in direct proportion to the number of units produced. |
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Term
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Definition
| Cost depends on the number of batches that are produced. |
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Term
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Definition
| the cost associated with the production of a specific product. |
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Term
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Definition
| Cost that vary from one facility to another facility |
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