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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › March/June 2019 Belton Park Resort
Why do we exclude costs in the “incremental running costs” section for staff costs and power costs.
Staff costs: We exclude the manager’s salary $2,500 and chef’s salary $2,000 in hotel and manager’s salary $0 in water park – is it because they are paid ‘fixed’ for the full year regardless of their working hours?
Power costs: We exclude the electric $0, gas – fixed charge $0 and security $0. Is this because these are fixed monthly charges so we exclude all fixed charges in the incremental cash flows?
Correct. Incremental means extra and so if the payments are fixed then there is no extra cost or saving.