Differential Analysis

expense that a manager eliminates by choosing one alternative over another in a decision-making process

slowdown or stoppage in one stage of a process that lessens the output of the entire system

limitation that a company must operate under, such as time or lack of access to raw materials, that makes it more difficult to meet demand

process of examining the costs and benefits of different decisions that a company could make. The process helps companies make informed decisions.

method of decision-making using differential analysis that considers only the relevant costs and benefits of the alternative choices

difference in total costs between two different or alternate courses of action

difference between the revenues of two alternative decisions

increase in total cost that results from an increase in production

choice a company makes about whether to purchase an item from a third-party supplier or produce it internally

loss of possible gains when one alternative is chosen over another alternative

advantage that a company should consider to be important when making a decision using differential analysis

expense that a company should consider to be important when making a decision using differential analysis

one-time request that is made and fulfilled but is not part of an organization's normal, ongoing business

expense that has already been incurred and cannot be undone by any future choice among alternatives

method of decision-making using differential analysis that considers all the costs and benefits of the alternative choices, whether those costs and benefits are relevant or irrelevant

choice by a company to sacrifice one area of production at the expense of another area in order to maximize profits