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 make some customers appear more profitable than they actually are and make some products appear less profitable than they actually are true statements.

Question

Quizplus · Accepted Answer

Using the full-cost approach often leads to arguments within a company. Any method of allocation can make some products or customers appear less profitable. Top management, often finds full-cost analysis more useful. In the long run, some products, departments, or customers must pay for the fixed costs. Full-cost analysis has its place too.

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