Unit 6: Using Differential Analysis to Make Decisions
In this unit we examine how manufacturers decide whether or not to outsource elements of their operation, a decision process that requires making a differential analysis to determine the revenues and costs for alternative courses of action. As you work
through this unit, notice you will use the contribution margin income statement format. We will examine both relatively simple and more complex examples to establish the format used to perform differential analysis.
Completing this unit should take you approximately 4 hours.
6.1: Formatting differential analysis
6.2: Make-or-Buy Decisions
6.3: Product Line Decisions
6.4: Customer Decisions
6.5: Special Order
6.6: Cost-Plus Pricing and Target Costing