| A | B |
|---|
| Avoidable Cost | A cost that can be eliminated (in whole or in part) by choosing one alternative over another in a decision-making situation. This term is synonymous with relevant cost and differential cost. |
| Bottleneck | A machine or some other part of a process that limits the total output of the entire system. |
| Constraint | A limitation under which a company must operate, such as limited available machine time or raw materials, that restricts the companys ability to satisfy demand. |
| Differential Cost | Any cost that differs between alternatives in a decision-making situation. This term is synonymous with avoidable cost and relevant cost. |
| Joint Costs | Costs that are incurred up to the split-off point in a process that produces joint products. |
| Joint Products | Two or more items that are produced from a common input. |
| Make or Buy Decision | A decision concerning whether an item should be produced internally or purchased from an outside supplier. |
| Relaxing (or elevating) the constraint | An action that increases the amount of a constrained resource. |
| Relevant Cost | A cost that differs between alternatives in a particular decision. This term is synonymous with avoidable cost and differential cost. |
| Sell or process further decision | A decision as to whether a joint product should be sold at the split-off point or sold after further processing. |
| Special Order | A one-time order that is not considered part of the companys normal ongoing business. |
| Split off point | That point in the manufacturing process where some or all of the joint products can be recognized as individual products. |
| Sunk Cost | Any cost that has already been incurred and that cannot be changed by any decision made now or in the future. |
| Vertical Integration | The involvement by a company in more than one of the steps from production of basic raw materials to the manufacture and distribution of a finished product. |
