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 is appropriate for analyzing whether to accept a special order or make or buy decision because it involves analyzing the incremental costs and revenues associated with each option. Retain or replace equipment decision and CVP analysis, sell or process further decision and allocation of indirect costs, and elimination of an unprofitable segment and allocation of indirect costs all require more comprehensive analysis beyond incremental analysis.

For Which of the Following Is Incremental Analysis Appropriate