When performing incremental analysis,
A)process costing unit costs should always be considered as they are incremental costs.
B)process costing unit costs should be considered as they are period costs.
C)process costing unit costs should not be considered as they comprise of both product costs and period costs.
D)all process costing unit costs should not be considered as they are sunk costs.

Question

Quizplus · Accepted Answer

Process costing unit costs typically include both product costs (which are variable and directly tied to production levels) and period costs (which are fixed and incurred over a time period regardless of production levels). Incremental analysis focuses on the additional or incremental costs and benefits of a decision. Since process costing unit costs mix both variable and fixed components, they should not be considered in their entirety for incremental analysis without separating these components.

When Performing Incremental Analysis