FMGT 4210 Chapter 11
Decision Model - ANS-Formal method of making a choice that often involves both quantitative
and qualitative analyses.
Relevant Costs - ANS-Expected future costs that differ among alternative courses of action
being considered.
Relevant Revenues - ANS-Expected future revenues that differ among alternative courses of
action being considered.
Historical Costs - ANS-These are useful for making predictions, but irrelevant when making
decisions.
Sunk Costs - ANS-Costs that have already been incurred and cannot be recovered.
Quantitative Factors - ANS-Outcomes measured in numerical terms, in some instances
financially, as in they can be expressed in monetary terms.
Qualitative Factors - ANS-Outcomes that are difficult to measure accurately in numerical terms.
Special Orders - ANS-As long as you cover variable costs and make a profit, you should always
accept ______ _______.
Business Function Costs - ANS-The sum of all costs (variable and fixed) in a particular business
function of the value chain.
Full Product Costs - ANS-The cost to develop, produce, and deliver the product or service (the
cost of all resources throughout value chain).
Insource - ANS-Processes or activities that are completed in-house.
Outsource - ANS-To use outside suppliers and manufacturers to produce goods and services.
Make/Buy Decision - ANS-An evaluation of whether components and assemblies will be
purchased from outside suppliers or built by the company itself.
Vertical Integration - ANS-Practice where a single entity controls the entire process of a product,
from the raw materials to distribution by insourcing.
Incremental Costs - ANS-Cost increases resulting from the performance of an additional activity.
Decision Model - ANS-Formal method of making a choice that often involves both quantitative
and qualitative analyses.
Relevant Costs - ANS-Expected future costs that differ among alternative courses of action
being considered.
Relevant Revenues - ANS-Expected future revenues that differ among alternative courses of
action being considered.
Historical Costs - ANS-These are useful for making predictions, but irrelevant when making
decisions.
Sunk Costs - ANS-Costs that have already been incurred and cannot be recovered.
Quantitative Factors - ANS-Outcomes measured in numerical terms, in some instances
financially, as in they can be expressed in monetary terms.
Qualitative Factors - ANS-Outcomes that are difficult to measure accurately in numerical terms.
Special Orders - ANS-As long as you cover variable costs and make a profit, you should always
accept ______ _______.
Business Function Costs - ANS-The sum of all costs (variable and fixed) in a particular business
function of the value chain.
Full Product Costs - ANS-The cost to develop, produce, and deliver the product or service (the
cost of all resources throughout value chain).
Insource - ANS-Processes or activities that are completed in-house.
Outsource - ANS-To use outside suppliers and manufacturers to produce goods and services.
Make/Buy Decision - ANS-An evaluation of whether components and assemblies will be
purchased from outside suppliers or built by the company itself.
Vertical Integration - ANS-Practice where a single entity controls the entire process of a product,
from the raw materials to distribution by insourcing.
Incremental Costs - ANS-Cost increases resulting from the performance of an additional activity.
