How Is Differential Analysis Used to Determine When to Add

question 22

Multiple Choice

How is differential analysis used to determine when to add or drop parts of an operation?

• A)If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product,then the product generates profits and the firm should continue its production.
• B)If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product,then the product generates losses and the firm should continue its production.
• C)If the differential revenue from the sale of a product exceeds the differential costs required to provide the product for sale,then the product generates profits and the firm should continue its production.
• D)If the differential revenue from the sale of a product exceeds the differential costs required to provide the product for sale,then the product generates profits and the firm should discontinue its production.

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