Managerial Accounting: Short-Term Decision Making and Cost Terms

Vocabulary flashcards covering key managerial accounting terminology related to cost analysis, constraints, and operational decision-making.

Relevant information

Expected future data that differs between alternatives

Sunk cost

A past cost that cannot be changed by any current decision

Opportunity cost

The benefit given up by not choosing the next best alternative

Avoidable fixed cost

A fixed cost that goes away if a choice is made, such as dropping a product

Unavoidable fixed cost

A fixed cost that continues whichever choice is made

Constraint

A factor that limits production or sales, such as machine hours or shelf space

Product mix

The combination of products a company makes and sells

Outsourcing

Buying a good or service from an outside company instead of making it

Offshoring

Moving work to another country, done by the company itself or by a supplier