The "contribution margin approach" to marketing cost analysis:
A) allocates all costs to products or customers.
B) should always be used instead of the full-cost approach--so that fixed costs are fully considered.
C) focuses management's attention on variable costs rather than total costs.
D) assumes that all costs must be allocated.
E) None of the above.

Question

Quizplus · Accepted Answer

The contribution margin approach focuses management's attention on variable costs rather than total costs. It is an approach in which only the variable costs of production are considered and fixed costs are taken as a lump sum that remains constant. This approach is useful in determining the break-even point and making decisions about pricing and product mix.

The "Contribution Margin Approach" to Marketing Cost Analysis