Marginal Analysis

Question 1

Focuses on the relevant revenues and costs that are associated with a decision

Answer 1

Marginal analysis

Question 2

Relevant costs included in business decisions:

Answer 2

Direct costs
Prime costs
Discretionary costs
Incremental costs
Opportunity costs
Avoidable costs

Question 3

Opportunities that require a firm to decide whether a specially priced order should be accepted or rejected

Answer 3

Special order decisions

Question 4

If there is excess capacity, a comparison should be made of the:

Answer 4

Incremental costs of the order to the incremental revenue generated by the order

Question 5

Sunk costs that are not relevant to decisions of whether to sell or to process further:

Answer 5

Joint costs

Question 6

Costs incurred after the split off pint that can be traced to individual products and are relevant to the decision of whether to sell or process further

Answer 6

Separable costs