When managers make decisions about adding or dropping customers,managers only focus on:
A)incremental costs only.
B)opportunity costs only.
C)allocating overhead costs.
D)incremental and opportunity costs only.
E)the value chain and not cost factors.

Question

Quizplus · Accepted Answer

When managers make decisions about adding or dropping customers, they should consider both incremental and opportunity costs. Incremental costs are the costs directly associated with serving a particular customer or group of customers, while opportunity costs are the potential revenue that could be generated from serving an alternative customer or group of customers. By considering both types of costs, managers can make informed decisions about which customers to acquire, retain, or drop. Allocating overhead costs and considering the value chain are also important factors, but they are not the only factors that should be considered when making these decisions.

When Managers Make Decisions About Adding or Dropping Customers,managers Only