The "contribution-margin approach" to marketing cost analysis:
A) considers only those costs which are directly related to particular alternatives.
B) is especially useful for estimating the long-run profit of a proposed strategy.
C) allocates variable costs which are hard to measure to overhead.
D) is especially useful for determining if there should be more controls on fixed costs.
E) All of these are correct.

Question

Quizplus · Accepted Answer

The contribution-margin approach focuses on analyzing and comparing the revenue generated by different products or services and deducting only the variable costs associated with those products or services. This approach helps to identify which products or services are generating the most profit and can be helpful in making pricing and production decisions. It does not allocate or consider fixed costs, which are typically allocated to overhead. It is not necessarily useful for estimating long-run profit or determining if there should be more controls on fixed costs.

The "Contribution-Margin Approach" to Marketing Cost Analysis