COMMERCE 2AB3 Chapter 7: Chapter Seven — Incremental Analysis
10 Feb 2017
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Document Summary
Incremental analysis: the process of identifying the nancial data that change under alternative courses of action. Joint costs: for joint products, all costs incurred before the point at which the two products are separately identi able. This point is known as the split off point. Joint products: multiple end products produced from a single raw material and a common process. Opportunity cost: the potential bene t that may be lost from following an alternative course of action. Relevant costs: those costs and revenues that differ across alternatives. Sunk costs: costs that cannot be changed by any present or future decision. Theory of constraints: a speci c approach that a company uses to identify and manage constraints in order to achieve its goals. Management"s decision-making process: management"s decision making process does not always follow the same pattern. because decisions vary signi cantly in their scope, urgency, and importance.
