Which of the Following Is the Best Reason for Using

question 13

Multiple Choice

Which of the following is the best reason for using the contribution-margin approach in a marketing cost analysis by product line?

• A)The net profit of each product line is what we are trying to determine.
• B)Full allocation of all costs is the best accounting practice.
• C)To go beyond allocation of measurable costs is to allocate indirect costs on an arbitrary basis.
• D)When analyzing marketing costs by products,all such costs are indirect.
• E)In the long run all costs must be covered.

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Definitions:

Process Costing

An accounting methodology applied where production is continuous, assigning costs to units of product on the basis of process they go through.

Customized Products

Items or services tailored to meet the specific needs or preferences of individual customers.

Job Order Production

A production process used for making custom or specialized products in limited quantities upon receipt of a specific order.

Custom Jewelry

Jewelry made to a customer's specific requirements and preferences.