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Applications of incremental cost techniques in making managerial decisions

Incremental cost in fact is the added cost due to change either in the level of activity of in the nature of
activity.
 
The important areas in which incremental cost analysis could be used for managerial decision making are as under:
(i) Introduction of a new product
(ii) Discontinuing a product, suspending or closing down a segment of the business
(iii) Whether to process a product further or not
(iv) Acceptance of an additional order form a special customer at lower than existing price
(v) Opening of new sales territory and branch.
(vi) Optimizing investment plan out of multiple alternatives.
(vii) Make or buy decisions
(viii) Submitting tenders
(ix) Lease or buy decisions
(x) Equipment replacement decisions
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