The "contribution-margin approach" to marketing cost analysis:
A) Focuses attention on the allocation of fixed costs.
B) Is mainly concerned with the allocation of variable costs.
C) Always leads to the same conclusions as the "full-cost approach."
D) Is always preferred to the "full-cost approach."
E) None of these are correct.

Question

Quizplus · Accepted Answer

The contribution-margin approach focuses on the allocation of variable costs and is mainly concerned with analyzing how changes in sales volume affects profitability. It does not consider fixed costs in the same level of detail as the full-cost approach. Therefore, option A is incorrect. Option C is also incorrect because the two approaches can lead to different conclusions as they have different ways of allocating costs. Option D is incorrect because there may be situations where the full-cost approach is more appropriate than the contribution-margin approach. Therefore, the correct answer is B.

The "Contribution-Margin Approach" to Marketing Cost Analysis