1. Explain the difference among unit-related, batch-related, product-sustaining, and facility-sustaining costs and give an example of each.
2. What are the two attributes of a relevant variable?
3. Explain the concept of sunk cost. Are sunk costs ever relevant in short-term operating decisions? Why or why not?
1. Explain the concept of opportunity cost. Are opportunity costs ever relevant in short-term operating decisions? Why or why not?
2. Explain the term incremental. How are incremental revenues, costs, and profits used in short-term operating decisions?
3. What are the steps in a relevant variable analysis?
1. What is a special order decision? What variables are relevant in a special order decision?
2. What factors other than relevant costs and revenues must be considered when making a special order decision?
3. What is a make-or-buy decision? What are the relevant variables in a make-or-buy decision?