Question

Explain Three (3) benefits when using incremental analysis for making decisions.

Answer 1

Incremental analysis is a decision-making technique used in business to determine the true cost difference between alternatives. It is useful for business strategy including the decision to self-produce or outsource a function. it summarizes the benefits and disadvantages of a choice in contrast with other alternatives. the benefits of Incremental Analysis are as follows:

1) help Business to make a wide variety of financial decisions.

2) help business to determine whether to keep or replace equipment and whether to eliminate, or not, an unprofitable sector of a business.

3) It also helps us to make decisions related to our personal finances.

4) It also helps in allocating scares resources.