Corporate-sustaining costs should be allocated to:
A)motivate changes in customer behavior
B)evaluate distribution-channel managers
C)determine the selling price that will cover all costs
D)identify the most profitable customers

Question

Quizplus · Accepted Answer

Corporate-sustaining costs are indirect costs that are not easily assignable to individual products or activities. Allocating these costs to determine the selling price that will cover all costs is an appropriate approach to ensure the profitability of the business. By determining the accurate cost of each product, the company can set a selling price that will cover the direct and indirect costs of the product and ensure a profit margin. Therefore, option C is the best choice. Option A is incorrect because corporate-sustaining costs are not related to changes in customer behavior. Option B is incorrect because corporate-sustaining costs are not directly related to distribution-channel managers. Option D is incorrect because corporate-sustaining costs cannot be used to identify the most profitable customers.

Corporate-Sustaining Costs Should Be Allocated To