For which of the following is incremental analysis appropriate?
A)acceptance of a special order and a make or buy decision
B)a retain or replace equipment decision and cvp analysis
C)a sell or process further decision and allocation of indirect costs
D)elimination of an unprofitable segment and allocation of indirect costs

Question

Quizplus · Accepted Answer

Incremental analysis involves examining the costs and benefits of each alternative option and choosing the option with the highest net benefit. Both a make or buy decision and acceptance of a special order would require incremental analysis to determine which option is more beneficial to the company. The other options listed do not involve a decision between two alternatives and therefore, incremental analysis is not appropriate.

For Which of the Following Is Incremental Analysis Appropriate