Cost-Revenue Analysis for Decision Making FLASHCARDS

Absorption costing The accounting procedure whereby all manufacturing costs, including fixed costs, are included in the cost of goods manufactured Absorption costing

Direct costing The accounting procedure whereby only variable costs are included in the cost of goods manufactured, and fixed manufacturing costs are written off as expenses in the period in which they are incurred Direct costing

Opportunity cost Potential earnings or benefits that are given up because a certain course of action is taken Opportunity cost

Sunk cost A cost that has been incurred and will not change as a result of a decision Sunk cost

Marginal income The manufacturing margin minus variable operating expenses Marginal income

For additional reinforcement of accounting terms, visit the crossword puzzle on this Web site.