Asked by DM KHAN BHUTTO on May 28, 2024
Verified
In incremental analysis
A) costs are not relevant if they change between alternatives.
B) all costs are relevant if they change between alternatives.
C) only fixed costs are relevant.
D) only variable costs are relevant.
Incremental Analysis
A decision-making technique that evaluates the financial consequences of making one more unit of a product or entering a new market.
Relevant Costs
Those costs and revenues that differ across alternatives.
Fixed Costs
Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.
- Comprehend the elements affecting cost dynamics and their significance in marginal analysis.
Verified Answer
NS
Nurul SyahirahMay 28, 2024
Final Answer :
B
Explanation :
In incremental analysis, all costs that change between alternatives are relevant. This includes both fixed and variable costs. Therefore, option B is the correct answer. Options A, C, and D are incorrect as they suggest that only certain types of costs are relevant, while incremental analysis considers all costs that change.
Learning Objectives
- Comprehend the elements affecting cost dynamics and their significance in marginal analysis.