You will learn and be able

a. identify and define relevant costs (incremental, marginal, or differential costs),

sunk costs, avoidable costs, explicit and implicit costs, and relevant revenues

b. explain why sunk costs are not relevant in the decision-making process

c. demonstrate an understanding of and calculate opportunity costs

d. calculate relevant costs given a numerical scenario

e. define and calculate marginal cost and marginal revenue

f. identify and calculate total cost, average fixed cost, average variable cost, and

average total cost

g. demonstrate proficiency in the use of marginal analysis for decisions such as (a)

introducing a new product or changing output levels of existing products, (b)

accepting or rejecting special orders, (c) making or buying a product or service,

(d) selling a product or performing additional processes and selling a more value-

added product, and (e) adding or dropping a segment

h. calculate the effect on operating income of a decision to accept or reject a special

order when there is idle capacity and the order has no long-run implications

i. identify and describe qualitative factors in make-or-buy decisions, such as product

quality and dependability of suppliers

j. calculate the effect on operating income of a make-or-buy decision

k. calculate the effects on operating income of a decision to sell or process further;

and of a decision to drop or add a segment

l. identify the effects of changes in capacity on production decisions

m. demonstrate an understanding of the impact of income taxes on marginal analysis

n. recommend a course of action using marginal analysis