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.

Question

Quizplus · Accepted Answer

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.

Incremental Analysis Is Most Useful