Explore BrainMass
Share

Explore BrainMass

    What is incremental analysis? Provide an example, using numbers, of how incremental analysis might be used to make business decisions.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What is incremental analysis? Provide an example, using numbers, of how incremental analysis might be used to make business decisions.

    © BrainMass Inc. brainmass.com October 10, 2019, 5:11 am ad1c9bdddf
    https://brainmass.com/business/accounting/incremental-analysis-examples-496067

    Solution Preview

    Incremental analysis is a decision-making technique used when deciding between more than one alternative based on true-cost analysis. True-cost is when managers eliminate sunk costs (past costs that are irrelevant at the time because money has already been spent). For exiample, if a manager needs to purchase a new fax machine, the manager would focus on the cost of the fax machine and any accessories associated with the upkeep and ongoing use of the fax machine (i.e. film paper, toner, ink, any electricity used, any cost-savings related to the fax purchase (including the efficient time-use of employees). Nevertheless, the main differences to pay attention to are any differences in revenues made off the machine, costs associated with the machine, and any cost savings.

    Below is a great numerical example that I found on the unf.edu website:

    How to Perform Incremental Analysis

    The following steps should be performed to create an incremental analysis:

    Step 1: Compare ...

    Solution Summary

    The expert examines the incremental analysis examples.

    $2.19