Learning Team Weekly Reflection: Incremental Analysis Vs. Comprehensive Analysis

Learning Team Weekly Reflection
Incremental vs. Comprehensive Analysis
ACC/561
University of Phoenix

Making accurate managerial decisions based on a business’s financial and nonfinancial information are important. To understand the financial information necessary for making correct decisions it is helpful to create an incremental analysis. The incremental analysis identifies the relevant revenues and costs and the expected impact on future income. Although both incremental and comprehensive analysis can be utilized making decisions in the workplace environment, the incremental analysis is considered more economical while remaining just as effective as a comprehensive analysis. In this paper, we will evaluate the economic value and impact of utilizing incremental analysis versus a comprehensive analysis.
The incremental analysis assists in making important decisions, contributing the highest resolution while remaining accurate and cost effective. When determining different and various business decisions regarding cost and revenue, the
incremental analysis is an important and standardized approach. The incremental analysis is also a critical and timesaving tool that leads to an efficient method for identifying the possible results of decisions on future earnings in making better decisions regarding the productivity of the company. According to the text, an incremental analysis sometimes involves changes that at first glance might seem contrary to business. However, there are times when variable costs do not change in an alternate course of action, while fixed costs do change.
The decision-making process is a critical component in the managerial processes.
There is no distinct rule or pattern a manager follows because decisions are based on an instant obligation, which coincides with the requirement at hand that may vary depending on various factors. Accounting’s contributions to a manager’s decision-making process cannot be overstated as it provides many resources to support a process. It resolves issues and provides forecast information to project occurrences, provide mitigation analysis and financial assessments and data to support the operational requirements for leadership in numerous organizations throughout the world. Company management uses managerial accounting information to determine what should be sold and how to sell it, and to focus on which products would be more profitable to sell by the utilizations of Relevant Costing Analysis and Activity Based Costing
Techniques.
Incremental analysis is an efficient and economical way of providing managers with relevant information for decision-making purposes. According to Weygandt, Kieso, and Kimmel (2005), incremental analysis is a process used to identify the financial data that change under alternative courses of action. It concerns with questions such as whether company should accept or reject additional business, make or buy parts, sell or process, as well as how to allocate limited resources. Comprehensive analysis requires gathering more information. It requires a complete analysis of every significant aspect of a company 's financial operations with the goal of providing a full picture of the financial status of a company both currently and for the future.
Conclusion
In business, managerial decisions are based on financial and nonfinancial information. The economically beneficial analysis is incremental; comprehensive analysis can be utilized as a factor in the business decision-making process. After evaluating the economic value of incremental analysis, we have identified that change takes place in different courses of action. Incremental, unlike comprehensive, does not require details of every aspect in order to determine a company 's financial operations.

References

Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2005). Managerial Accounting: Tools for Business Decision Making, (3rd ed.). : John Wiley & Sons, Inc.