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Todd, our readings identify 6 uses for incremental analysis. What are they?

Todd, our readings identify 6 uses for incremental analysis. What are they?

If we are using incremental analysis to determine if we should sell at a special price, we have the opportunity to obtain additional business by making a major price concession to a specific customer.  Incremental analysis in this scenario assumes that sales of products in other markets are not affected by the special order, and it also assumes that the company is not operating at full capacity.

All, what is an example of an opportunity cost?

Clevetta, as managers, we may have the  option to sell a product at a given point in production or to process it further and sell at a higher price. How do we make the decision?

As a general rule, we should go ahead and process further as long as the incremental revenue from such processing exceeds the incremental processing costs. What does that mean? If we can obtain a higher margin by further processing the item than selling it unprocessed, we should proceed.

All, what about the decision to retain or replace equipment? What should we consider in the decision?

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