Differential analysis examines the impact on costs and revenues of specific management decisions by focusing on differential (or incremental) cash flows. It considers only those costs or revenues that will change as a result of a specific decision.
Incremental analysis, also known as differential analysis, is a decision-making tool used in business and accounting to assess the financial implications of different choices by focusing on relevant revenues and costs.
An in-depth look at incremental cash flow, its significance in differential analysis, how it impacts decision-making, and real-life applications.
Relevant costs are expected future costs that vary with different courses of action a manager might take, making them essential for effective decision-making.
