By-products Additional products resulting from the production of a main product. By-products generally have a small market value compared to the main product.

Committed fixed costs Costs relating to the basic facilities and organizational structure that a company must have to continue operations.

Differential analysis An analysis of the different costs and benefits that would arise from alternative solutions to a particular problem.

Differential cost or expense The difference between the amounts of relevant costs for two alternatives.

Differential revenue The difference between the amounts of relevant revenues for two alternatives.

Discretionary fixed costs Fixed costs subject to management control from year to year; an example is advertising expense.

Joint costs Those production costs incurred up to the point where the joint products split off from each other.

Joint products Two or more products resulting from a common raw material or production process.

Make-or-buy decision A decision concerning whether to manufacture or purchase a part or material used in manufacturing another product.

Opportunity cost The potential benefit that is forgone from not following the next best alternative course of action.

Relevant revenues or costs Revenues or costs that will differ in the future depending on which alternative course of action is selected.

Sunk costs Past costs that are not relevant in decision making because they have already been incurred.