1.An opportunity cost is the potential benefit lost by taking a specific action when two or more alternative choices are available.
2.A sunk cost will change with a future course of action.
3.An out-of-pocket cost requires a future outlay of cash and is relevant for current and future decision making.
4.Another name for relevant cost is unavoidable cost.
5.Relevant benefits refer to the additional or incremental revenue generated by selecting a particular course or action over another.
6.Significant sunk costs are relevant to decisions about the future.
7.The concept of incremental cost is the same as the concept of differential cost.
8.Additional business in the form of a special order of goods or services should be accepted when the incremental revenue equals the incremental costs.
9.In a make or buy decision, management should focus on costs that are the same under the two alternatives.
10.Part of the decision to accept additional business should be based on a comparison of the incremental (differential) costs of the added production with the additional revenues to be received.