With the "contribution-margin approach" to marketing cost analysis,
A) all costs are allocated to products, customers, or other categories.
B) fixed costs are allocated based on the profit contribution to the firm.
C) variable costs are treated as common costs.
D) common costs which are hard to allocate are ignored.
E) None of these is true.

Question

Quizplus · Accepted Answer

The "contribution-margin approach" to marketing cost analysis focuses on the contribution margin, which is sales revenue minus variable costs. This approach often ignores common costs that are hard to allocate directly to specific products, customers, or categories, as it primarily concerns itself with the profitability of individual items or segments after variable costs are subtracted.

With the "Contribution-Margin Approach" to Marketing Cost Analysis