A Reason for Using the Contribution-Margin Approach in a Marketing

question 7

Multiple Choice

A reason for using the contribution-margin approach in a marketing cost analysis is that:

• A)It tells management which territories or products are profitable.
• B)Arbitrarily allocating indirect expenses to individual territories or products can give misleading information to management.
• C)Ledger costs can be allocated into activity groups.
• D)Each marketing unit (product,territory,for example)should bear its full share of costs.
• E)This approach is especially useful as a basis for long-range planning.