Question

In what type of business decisions can incremental analysis be used?  

Answer 1

Answer:-Incremental Analysis:-It is a decision making techniques used in business to detemine the true cost differnce between alternatives.It is useful in the application of making business decisions including whether to self produce or outsource. Relevant cost are also called incremental costs becuase they are only incurred when an activity of relevance has been increased or started.The four facets of this type of analysis are:

1)- Opportunity Costs

2)- Sunk costs

3)- Relevant costs

4)- Unchanging costs

Here are some examples of incremental analysis:

1)-Accepting additional business proposals.

2)-Making or buying parts or products.

3)-Selling products or processing them further.

4)-Eliminating a business segment.

5)-Allocating scarce resources.