Accounting Terms for Cost
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For each statement indicate the accounting term or terms described:
A. Examination of differences between costs to be incurred and revenue to be earned under different courses of action.
B. A cost incurred in the past that cannot be changed as a result of future actions.
C. Costs and Revenue that are expected to vary depending on the course of action.
D. The benefit foregone by not pursuing an alternative course of action.
E. Products made from common raw materials and shared production processes.
F. A cost yet to be incurred that will require future payment and may vary among alternative course of action.
G. The point at which manufacturing costs are split equally between ending inventory and cost of goods sold.
Use the following accounting terms:
- Opportunity cost
- Out of pocket cost
- Joint products
- Incremental analysis
- Sunk cost
- Split off point
- Relevant information
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Solution Summary
The expert examines accounting terms for costs. An examination of differences between costs to be incurred and revenues to be earned under different courses of actions are provided.
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A. Examination of differences between costs to be incurred and revenue to be earned under different courses of action.
Incremental analysis. Incremental analysis is a technique which attempts to determine the net income/loss between two or more choices. For example, assume that a company can use its excess production capacity to either produce Product A or Product B. Incremental analysis would attempt to determine what net income/loss would be to the company for the production of both products, Product A only or Product B only.
B. A cost incurred in the past that cannot be changed as a result of future actions.
Sunk Cost. A sunk cost is a cost that has already been incurred and for which any future decisions would not affect. For example, the rent ...
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- M. Sc., London South Bank University
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