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Why Would a Company Often Calculate and Use Average Costs

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Why would a company often calculate and use average costs of its products and services rather than actual costs?


Definitions:

Corporate Level

Pertains to the strategic scope of an organization as a whole, encompassing all its divisions and products, and focusing on overall direction and goals.

Product Modification

A strategy where a company makes minor changes or improvements to a product to increase its appeal or to reach a different market segment.

Category Development Index

Category Development Index (CDI) measures the sales performance of a category within a specific market relative to the average market performance.

Brand Development Index

A measure of the sales strength of a brand within a specific market or demographic group.

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