Which of the following statements about the contribution-margin approach to marketing cost analysis is True?
A) With this approach, contribution margin and gross margin are assumed to be the same.
B) Only direct expenses are allocated to each market unit being analyzed with the contribution-margin approach.
C) All costs are allocated in the contribution-margin approach.
D) The contribution-margin approach assumes all costs are variable.
E) The contribution-margin approach focuses on indirect cost allocation.

Question

Quizplus · Accepted Answer

The contribution-margin approach to marketing cost analysis involves allocating only direct expenses to each market unit being analyzed. This method helps in understanding the direct contribution of each unit towards covering fixed costs and generating profit, without considering indirect costs or assuming all costs are variable.

Which of the Following Statements About the Contribution-Margin Approach to Marketing