The contribution-margin and the full-cost approaches to marketing cost analysis are different, but they should lead to the same action implications.

Question

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The contribution-margin approach focuses on the variable costs associated with each product or service, while the full-cost approach takes into account all costs, including fixed costs. Therefore, the two approaches can lead to different action implications. For example, a product with a low contribution margin may be profitable under the full-cost approach if it covers its portion of the fixed costs, but may not be profitable under the contribution-margin approach.

The Contribution-Margin and the Full-Cost Approaches to Marketing Cost Analysis