One way for managers to get an estimate of customer profitability is to allocate expenses to customers through activity-based costing.

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Activity-based costing allows managers to allocate expenses based on the activities that generate costs, providing a more accurate estimate of customer profitability than traditional cost allocation methods. By assigning costs to specific customer activities, managers can identify which customers are the most profitable and focus their efforts on retaining and increasing business from those customers.

One Way for Managers to Get an Estimate of Customer