If one were using the "full-cost" approach to marketing cost analysis, then allocating fixed costs on the basis of sales volume would:
A) make some customers appear more profitable than they actually are.
B) not be done--because only variable costs would be analyzed.
C) make some products appear less profitable than they actually are.
D) decrease the profitability of the whole business.
E) Both A and C are true statements.

Question

Quizplus · Accepted Answer

Allocating fixed costs based on sales volume can distort profitability by making high-volume customers or products appear more profitable and low-volume ones less profitable than they actually are.

If One Were Using the "Full-Cost" Approach to Marketing Cost