The first step in conducting a cost analysis is to:
A) Determine whether to use a full-cost or a contribution-margin approach
B) Allocate natural costs to functional cost centers
C) Break costs of revenues into relatively large blocks so that little meaning is lost within each block
D) Determine which segment of the population most needs to be analyzed
E) Specify the purpose for which the study is being done

Question

Quizplus · Accepted Answer

The first step in conducting a cost analysis is to specify the purpose for which the study is being done. This will provide the overall guidance for the analysis and help determine which approach to use (full-cost or contribution-margin) as well as how to allocate costs. Breaking costs into large blocks or identifying a specific population segment to analyze should come after the purpose has been defined.

The First Step in Conducting a Cost Analysis Is To