Regarding marketing cost analysis,
A) the full-cost approach usually should be used as there are almost always some fixed costs to be allocated.
B) the contribution-margin approach focuses attention on variable costs.
C) fixed costs should be allocated according to the contribution-margin approach.
D) the action implications will be the same whether the full-cost or contribution-margin approach is used.
E) the contribution-margin approach provides the most complete allocation of total expenses.

Question

Quizplus · Accepted Answer

The contribution-margin approach focuses on variable costs, which are the costs that change in relation to the level of production or sales. This approach helps identify the contribution margin of each product or service and can assist in determining which products or services are most profitable. The full-cost approach, on the other hand, allocates both fixed and variable costs to products or services, which may not accurately represent the profitability of each. Therefore, the contribution-margin approach is the best choice for marketing cost analysis.

Regarding Marketing Cost Analysis