Customer profitability:
A)is reflected by gross margin.
B)are most accurately measured using traditional costing.
C)are most accurately measured using activity based costing.
D)are most accurately measured using a combination of traditional costing and activity based costing.

Question

Quizplus · Accepted Answer

Customer profitability can be most accurately measured using activity based costing, which focuses on the activities that drive costs and the resources used by those activities. Traditional costing may not accurately allocate costs to specific customers or products, while a combination of traditional and activity based costing may be too complex and time consuming. Gross margin alone does not provide a complete picture of customer profitability as it does not consider all costs associated with serving a customer.

Customer Profitability