Question

From Incremental analysis share a specific business decision or situation for using one of the analysis tools and how it can help to analyze that business decision.

Analysis Tool given- Opportunity Cost

Answer 1

Incremental costs are also called as opportunity costs.

incremental analysis :

Incremental analysis is a decosion making technique used in business to determine the true cost difference between alternatives. Also ccalled the relevant cost approach, marginal analysis or differential analysis, incremental analysis disregards any sunk cost. Incremental analysis is useful in the application of making business decisions including whether to self-produce or utilize outsourcung.

opportunity cost analysis for business decision:

Opportunity cost analysis helps companies decide whether or not to accept a special order. This special order is typically lower than its normal selling price. It also assists with allocating limited resources among several product lines to ensure the scarce asset is utilized to return the greatest benefit. Incremental analysis entails decisions on whether to produce or buy goods, scrap a project or rebuild an asset. Finally, oppprtunity cost analysis provides insight into whether to produce a good further or sell at a certain point during the manufacturing proces.

Opportunity cost analysis is a problemm sollving approach that utilizes accounting information to assist in decision making. It is applied when more than one alternative is present.