Agricultural and Biosystems Engineering Licensure Examination (ABELE) Area 1 Practice Test

Incremental cost is the additional amount you incur as a result of choosing a particular course of action. The ₱400,000 described as total salary and other expenses represents the extra outlay caused specifically by undertaking the new activity or decision, beyond what you would spend otherwise. It’s not about how costs behave with output (fixed vs. variable) or about indirect costs (overhead); it’s the change in total cost when a specific option is selected, which is precisely what incremental cost captures.