If incremental users are newly formed companies or subunits,such as a new product line or a new sales territory,the _________________ method may enhance their chances for survival in the short run by assigning them a low allocation of the common costs.

Question

Quizplus · Accepted Answer

The incremental method allocates costs based on the specific cost drivers of each subunit or product line. By assigning newly formed companies or subunits a low allocation of common costs, they can better manage their costs in the short run and increase their chances of survival. The reciprocal, stand-alone, and step-down methods are not specifically designed for handling incremental costs.

If Incremental Users Are Newly Formed Companies or Subunits,such as a New