Key terms for final exam acct212

Prices are set by potential buyers’ bids

• Auction-based pricing

• Avoidable expense

• Dynamic pricing

• Incremental cost

Expense (or cost) that is relevant for decision making; expense that is not incurred if a department, product, or service is eliminated.

• Auction-based pricing

• Avoidable expense

• Dynamic pricing

• Incremental cost

System where prices vary depending on changing market conditions or demand.

• Auction-based pricing

• Avoidable expense

• Dynamic pricing

• Incremental cost

Additional cost incurred only if a company pursues a specific course of action.

• Auction-based pricing

• Avoidable expense

• Dynamic pricing

• Incremental cost

Incremental revenues minus incremental costs.

• Incremental income

• Incremental revenue

• Markup

• Materials markup

Additional revenue generated by taking one course of action over another.

• Incremental income

• Incremental revenue

• Markup

• Materials markup

Amount added to cost per unit in computing a selling price.

• Incremental income

• Incremental revenue

• Markup

• Materials markup

A percentage of materials cost that includes materials-related overhead costs and a profit margin. Used in time and materials pricing.

• Incremental income

• Incremental revenue

• Markup

• Materials markup

Manager decision to buy a product or service from another entity; part of a make or buy decision; also called make or buy.

• Outsourcing

• Price-setter

• Price-taker

• Time and materials pricing

Entity with more control to set prices due to its unique prices and brands.

• Outsourcing

• Price-setter

• Price-taker

• Time and materials pricing