Final answer:
Incremental costs in an electric car project include the cost of purchasing electric car batteries, installing charging stations, and marketing. The cost of manufacturing the electric car is not considered incremental if it's an existing cost, unless the project introduces a new line that requires additional manufacturing expenditure.
Step-by-step explanation:
In the context of an electric car project, incremental costs refer to the additional expenses that will be incurred directly as a result of proceeding with the project. These are the new or extra costs that the project will bring, in contrast to fixed or sunk costs that have already been incurred or are not affected by the decision to go ahead with the project. When assessing whether to proceed with an electric car project, several costs should be considered as incremental:
- Cost of purchasing the electric car batteries, as the project cannot proceed without them.
- Cost of installing charging stations, because additional charging infrastructure is necessary for supporting the use of electric cars.
- Cost of marketing the electric car, which is a vital component for the successful launch and adoption of a new product.
The cost of manufacturing the electric car should not be treated as an incremental cost if these are existing costs that the company is already incurring for its current line of products. However, if the project involves a new line of electric cars that requires additional expenditure, then these manufacturing costs would be incremental to the project.