Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called
A) Activity-Based Costing (ABC).
B) input-output analysis.
C) factor analysis.
D) Revenue-Based Costing (RBC.)
E) Future Date Costing (FDC).

Question

Quizplus · Accepted Answer

Activity-Based Costing (ABC) is the most appropriate accounting technique to conduct customer profitability analysis (CPA) as it traces the costs of activities and processes required to serve specific customers or customer groups. ABC helps in identifying and allocating the costs of resources used to serve customers, which is crucial to understand customer profitability.

Customer Profitability Analysis (CPA) Is Best Conducted with the Tools