Arvid's Moving and Storage has a fleet of 37 trucks.Arvid currently has two of his own mechanics who perform all of the routine maintenance as well as other minor repairs on all of the trucks.However,he wonders whether outsourcing this work would be more cost-effective and asks his accountant to work with two managers to analyze such a change.What type of analysis would the accountant be most likely to use?

Question

Quizplus · Accepted Answer

Incremental analysis is the best choice in this scenario since it involves comparing the cost and benefits of different alternatives to determine the most cost-effective option. In this case, the accountant would compare the cost of outsourcing maintenance to the cost of having in-house mechanics, taking into account factors such as labor costs, materials, and other relevant expenses. This analysis would provide Arvid with data that could help him make an informed decision about whether to continue with his current maintenance strategy or switch to outsourcing. Ratio analysis, horizontal analysis, and CPM analysis are not relevant to this scenario.

Arvid's Moving and Storage Has a Fleet of 37 Trucks