A company has to decide whether to Make or Buy Through differential cost an analysis,how will you ascertian the net difference between the two alternatives so as to assest the manageoin their decision making? Use hypothetical figuresvto illustrate.
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Differential analysis is useful in this decision making because a company's income statement does not automatically associate costs with certain products, segments, or customers. Thus, companies must reclassify costs as those that the action would change and those that it would not change.