When engaging in short-run incremental analysis, managers should ignore:

Question

Quizplus · Accepted Answer

Short-run incremental analysis is focused on analyzing changes in costs and revenues in the short term. Fixed costs, which do not change with changes in activity level, are irrelevant in this analysis as they will not be impacted by short-term decisions. Therefore, managers should ignore fixed costs when engaging in short-run incremental analysis. Implicit and explicit costs, as well as the effects on the costs of already existing products, may all be relevant and should not be ignored without careful consideration.

When Engaging in Short-Run Incremental Analysis, Managers Should Ignore