Asked by Jordan Ratliff on Jun 09, 2024
Verified
Incremental analysis is most useful
A) in developing relevant information for management decisions.
B) in choosing between the net present value method and the internal rate of return method.
C) in evaluating the master budget.
D) as a replacement technique for variance analysis.
Incremental Analysis
The process of comparing the additional costs and benefits of a decision to determine if it is worthwhile.
Relevant Information
Data that is applicable to the decision-making process, often involving financial and operational outcomes.
Management Decisions
The process by which management selects among available options to guide the operations and set the strategic direction of an organization.
- Understand the methodology of gradual analysis and its role in decisions made by managers.
Verified Answer
CO
Cesar OrozcoJun 12, 2024
Final Answer :
A
Explanation :
Incremental analysis, also known as differential analysis, focuses on the changes in costs and revenues that occur when alternatives are compared. It is used to develop relevant information for management decisions, such as whether to make or buy a product, whether to accept a special order, or whether to discontinue a product line. It is not typically used in choosing between NPV and IRR, evaluating the master budget, or as a replacement for variance analysis.
Learning Objectives
- Understand the methodology of gradual analysis and its role in decisions made by managers.