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VOCAB! HELP If incremental revenue from processing exceeds the extra cost of processing further If the fixed costs savings exceed the contribution margin lost from

VOCAB! HELP

If incremental revenue from processing exceeds the extra cost of processing further

If the fixed costs savings exceed the contribution margin lost from a product line or department

Their products and services are unique or have little competition

Restrict the amount of product that can be manufactured or sold

Used by price setters

Contract an outside company to produce a product or perform a service

Looks at how operating income will be different under each alternative

Incurred only if the product line is retained

Benefit foregone by choosing a particular course of action

Costs that have been incurred in the past and cant be changed

Contribution margin of a product line minus direct fixed costs

Not relevant when there is excess capacity

Have work performed overseas

Starts with the amount customers are willing to pay and subtracts the companys desired profit

Often calculated as a percentage return on investment in assets

Their products and services are not unique or branded

1.

Incremental analysis

2.

Sunk costs

3.

Price takers

4.

Price setters

5.

Cost-plus pricing

6.

Target costing

7.

Desired profit

8.

Fixed costs

9.

Avoidable fixed costs

10.

Decide to discontinue

11.

constraints

12.

Outsourcing

13.

Offshoring

14.

Opportunity cost

15.

Process further

16.

Segment margin

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