| Vertical integration | The involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales, and after-sales service |
| Sunk cost | A cost that has already been incurred and that cannot be changed by any decision made now or in the future |
| Split-off point | That point in the manufacturing process where some or all of the joint products can be recognized as individual products. |
| Special order | A one-time order that is not considered part of the company’s normal ongoing business. |
| Sell or process further decision | A decision as to whether a joint product should be sold at the split-off point or sold after further processing. |
| Relevant cost | A difference in cost between any two alternatives |
| Relevant benefit | A benefit that differs between alternatives in a decision. |
| Relaxing (or elevating) the constraint | An action that increases the amount of a constrained resource. Equivalently, an action that increases the capacity of the bottleneck. |
| Opportunity cost | The potential benefit that is given up when one alternative is selected over another |
| Make or buy decision | A decision concerning whether an item should be produced internally or purchased from an outside supplier. |
| Joint products | Two or more products that are produced from a common input. |
| Joint costs | Costs that are incurred up to the split-off point in a process that produces joint products. |
| Differential revenue | The difference in revenue between two alternatives |
| Differential cost | A difference in cost between two alternatives. |
| Constraint | A limitation under which a company must operate, such as limited available machine time or raw materials, that restricts the company’s ability to satisfy demand. |
| Bottleneck | A machine or some other part of a process that limits the total output of the entire system. |
| Avoidable cost | A cost that can be eliminated by choosing one alternative over another in a decision. |
