Regarding marketing cost analysis, which of the following statements is TRUE?
A) Natural accounts are set up to indicate the purpose for which the expenditures were made.
B) The contribution-margin approach focuses attention on all costs equally.
C) The first step is to reclassify all costs in the natural accounts into functional accounts.
D) The total of costs in the natural accounts will often differ from the total of those in the functional accounts.
E) All of these are true.

Question

Quizplus · Accepted Answer

The first step in marketing cost analysis is to reclassify all costs in the natural accounts into functional accounts. Natural accounts are set up to describe the purpose for which expenditures were made, while functional accounts are organized around major activities or functions, such as sales, customer service, and advertising. The contribution-margin approach does not focus attention on all costs equally since it only considers the direct costs associated with producing and selling a product, while ignoring fixed costs such as rent and administrative salaries. The total of costs in the natural accounts should be equal to the total of those in the functional accounts once the reclassification has been completed.

Regarding Marketing Cost Analysis, Which of the Following Statements Is