The full-cost approach and the contribution-margin approach always suggest the same outcome.

Question

Quizplus · Accepted Answer

The two approaches can produce different outcomes because they use different methods of allocating costs. The full-cost approach includes both direct and indirect costs in the calculation of product cost, while the contribution-margin approach only considers the variable costs. As a result, the two approaches can yield different recommendations for pricing and product mix decisions.

The Full-Cost Approach and the Contribution-Margin Approach Always Suggest the Same