Incremental Analysis

Incremental Analysis
A decision-making technique used in business to determine the true cost difference between alternatives. Incremental analysis ignores sunk costs and costs that are the same between the two alternatives to look only at the remaining costs. For this reason, it is also called the "relevant cost approach," "marginal analysis" or "differential analysis."

If a company is considering replacing its old copy machine, using incremental analysis, the company would not look at the cost of the existing copy machine because it is a sunk cost (the cost of buying it cannot be reversed). They would look at things like the cost of toner cartridges for each machine, the cost of the electricity run each machine, and most importantly, the time saved by having employees use a more efficient model and perhaps the cost savings of being able to prepare documents in-house instead of outsourcing them.


Investment dictionary. . 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • incremental analysis — See: differential analysis …   Accounting dictionary

  • incremental analysis — See differential analysis …   Big dictionary of business and management

  • Приростной анализ (INCREMENTAL ANALYSIS)  — Метод анализа проблем принятия управленческих решений, базирующийся не на общих суммах затрат и выгод, связанных с действием (или набором альтернативных действий), а на их приросте. Называется также Дифференциальным анализом (Differential… …   Словарь терминов по управленческому учету

  • Incremental dating — techniques allow the construction of year by year annual chronologies, which can be temporally fixed ( i.e., linked to the present day and thus calendar or sidereal time) or floating.Archaeologists use tree ring dating (dendrochronology) to… …   Wikipedia

  • Incremental cost-effectiveness ratio — The incremental cost effectiveness ratio of an intervention in health care is a term used in cost effectiveness analysis in pharmacoeconomics. It is defined as the ratio of the change in costs of a therapeutic intervention (compared to the… …   Wikipedia

  • differential analysis — incremental analysis An assessment of the impact on costs and revenues of specific management decisions. Such an analysis will focus on identifying the differential (or incremental) cash flows, i.e. those costs or revenues that will change as a… …   Accounting dictionary

  • differential analysis — incremental analysis An assessment of the impact on costs and revenues of specific management decisions. Such an analysis will focus on identifying the differential (or incremental) cash flows, i. e. those costs or revenues that will change as a… …   Big dictionary of business and management

  • incremental cash flow — See: differential analysis …   Accounting dictionary

  • Intelligence analysis — This article deals with the intellectual process of analysis itself, as opposed to intelligence analysis management, which, in turn, is a subcomponent of intelligence cycle management. For a complete hierarchical list of articles in this series,… …   Wikipedia

  • Iterative and incremental development — is a cyclic software development process developed in response to the weaknesses of the waterfall model. It is an essential part of the Rational Unified Process, the Dynamic Systems Development Method, Extreme Programming and generally the agile… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”