The full-cost approach to income statement analysis includes only direct costs in the profitability analysis.

Question

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The full-cost approach to income statement analysis includes both direct and indirect costs in the profitability analysis. Direct costs are those that can be directly attributed to the production or sale of a product or service, while indirect costs are those that cannot be easily traced to a specific product or service, such as rent, utilities, or administrative expenses. By including both types of costs, the full-cost approach gives a more complete picture of the true profitability of a business.

The Full-Cost Approach to Income Statement Analysis Includes Only Direct