Allocated corporate costs are irrelevant when analyzing whether to drop a customer.

Question

Quizplus · Accepted Answer

Allocated corporate costs refer to expenses that are indirectly incurred by the company, such as rent and administrative expenses. These costs should not be factored in when analyzing whether to drop a customer, as they are not directly associated with the customer's activities or profitability. Only direct costs, such as materials, labor, and other expenses specifically attributed to serving the customer, should be considered in this analysis.

Allocated Corporate Costs Are Irrelevant When Analyzing Whether to Drop