Differential Revenue is the amount of revenue that is expected to increase or decrease as a result of one course of action over another.
It is the difference in sales that two different courses of action will generate. The concept is commonly used when assessing between two (or more) business investments.
For example, a manager is debating whether to invest in a new product line that will result in $1,000,000 in new sales or to increase marketing for an existing product line that will result in $700,000 in new sales. The revenue difference between the two options is $300,000.
The mistake in applying the differential revenue concept is that it ignores the differences in profit or cash flows generated by the various decisions. Profits or cash flows are far more important than revenue because they contribute to a company's financial health.
To know more about Differential Revenue here-
brainly.com/question/13987039
#SPJ4
