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The Sea is Getting Rough: Analysis of Incremental Costs during the Pandemic

Author

Listed:
  • Joyce Mariella Medeiros Cavalcanti
  • Ewerton Alex Avelar
  • Fernando Roberto Cavalcante Bandeira do Amaral
  • Kenyth Alves de Freitas

Abstract

This teaching case aims to understand how incremental cost analysis can be applied in decision-making. The case portrays a fishing company in the segment that suffered a disruption in demand from the international market as a result of the COVID-19 pandemic. Its managers, who already acted to mitigate previous financial problems, now need to decide how to dispose of fish production during the pandemic. The case encourages the development of analytical competence on the impact of a rupture in demand, the identification of relevant costs for decision-making from an income statement, and managerial decision-making based on incremental cost analyzes. This case, based on interviews and estimated accounting data, was designed for undergraduate and graduate courses focused on costs in the areas of Business and Accounting.

Suggested Citation

  • Joyce Mariella Medeiros Cavalcanti & Ewerton Alex Avelar & Fernando Roberto Cavalcante Bandeira do Amaral & Kenyth Alves de Freitas, 2021. "The Sea is Getting Rough: Analysis of Incremental Costs during the Pandemic," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 25(Spe), pages 200227-2002.
    • Handle: RePEc:abg:anprac:v:25:y:2021:i:spe:1470
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    References listed on IDEAS

    as
    1. Duxbury, Darren, 2012. "Sunk costs and sunk benefits: A re-examination of re-investment decisions," The British Accounting Review, Elsevier, vol. 44(3), pages 144-156.
    2. Kevin P. Scheibe & Jennifer Blackhurst, 2018. "Supply chain disruption propagation: a systemic risk and normal accident theory perspective," International Journal of Production Research, Taylor & Francis Journals, vol. 56(1-2), pages 43-59, January.
    3. Chenhall, R. H. & Langfield-Smith, K., 1998. "The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a systems approach," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 243-264, April.
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