For which of the following is incremental analysis appropriate?
A)acceptance of a special order and a make-or-buy decision
B)a retain or replace equipment decision and CVP analysis
C)a sell or process further decision and allocation of indirect costs
D)elimination of an unprofitable segment and allocation of indirect costs

Question

Quizplus · Accepted Answer

Incremental analysis involves comparing the additional revenues and costs associated with a specific decision and evaluating whether it will benefit the company. Acceptance of a special order and make-or-buy decisions both involve incremental analysis as they require a comparison of the incremental costs and revenues that will be generated by the decision. The other options involve different types of analysis, such as retention or replacement decisions requiring a capital budgeting approach, and sell or process further decisions requiring analysis of joint costs and relevant costing.

For Which of the Following Is Incremental Analysis Appropriate