Regarding marketing cost analysis, which of the following statements is TRUE?
A) Natural accounts are set up to indicate the purpose for which the expenditures were made.
B) The contribution-margin approach focuses attention on all costs equally.
C) The first step is to reclassify all costs in the natural accounts into functional accounts.
D) The total of costs in the natural accounts will often differ from the total of those in the functional accounts.
E) All of the above are true.

Question

Quizplus · Accepted Answer

The first step in marketing cost analysis is to reclassify all costs in the natural accounts into functional accounts, as this provides a clear picture of the costs by function or activity. Natural accounts are simply used to indicate the purpose for which the expenditures were made, while functional accounts group costs according to the functions or activities of the marketing department. The contribution-margin approach does not focus on all costs equally, as it only considers variable costs that can be directly attributed to the product or service being sold. Finally, the total of costs in the natural accounts may differ from the total of those in the functional accounts, as some costs may be allocated to different functions or activities.

Regarding Marketing Cost Analysis, Which of the Following Statements Is