For which of the following decisions is incremental analysis not appropriate?
A)Elimination of an unprofitable segment
B)Determining cost behaviour
C)A make or buy decision
D)An allocation of limited resource decision

Question

Quizplus · Accepted Answer

Incremental analysis is used to make decisions that involve comparing the additional costs and benefits of different options. Cost behavior is not a decision that involves comparing different options, but rather understanding how costs change in relation to a change in volume or activity level. Therefore, incremental analysis would not be appropriate for determining cost behavior.

For Which of the Following Decisions Is Incremental Analysis Not