A Manager Is Using a Full-Cost Approach, Then Allocating Fixed

question 38

Multiple Choice

A manager is using a full-cost approach, then allocating fixed costs on the basis of sales volume as a way of analyzing marketing costs. This method could:

• A) Result in a decrease of profitability for the entire company
• B) Create an environment that limits the total sales that can be made
• C) Create an environment where high-volume customers appear more profitable than they actually are
• D) Create an environment where low-volume customers appear more profitable than they actually are
• E) All of the above

---

Definitions:

Senior Executives

High-ranking employees in a business who are responsible for making major corporate decisions, usually part of the company’s top management.

Criminally Prosecuted

The process of being charged with and tried for a criminal offense by legal authorities.

Basic Resources

Essential assets or inputs required for the operation of an organization, including natural resources, human resources, and capital.

Goods

Tangible items that are produced or manufactured for sale to consumers, distinguished from services.