(Solved):The purpose of incremental analysis is to find the alternative a. with a few relevant costs. b….

 

Question

The purpose of incremental analysis is to find the alternative:

a. with a few relevant costs.

b. that brings in the highest revenue.

c. that contributes the most to profits.

d. with the lowest fixed costs.

 

EXPERT ANSWER

Answers is C. that contributes the most to profits.

Incremental analysis is done by companies in order to compare two alternatives using relevant costs. Relevant costs are costs that differ between the alternatives, which means that fixed costs are

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