The "Contribution Margin Approach" to Marketing Cost Analysis

question 46

Multiple Choice

The "contribution margin approach" to marketing cost analysis:

• A) allocates all costs to products or customers.
• B) should always be used instead of the full-cost approach--so that fixed costs are fully considered.
• C) focuses management's attention on variable costs rather than total costs.
• D) assumes that all costs must be allocated.
• E) None of the above.

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Definitions:

Annual Coupon Bond

A bond that pays interest to the holder annually until its maturity, at which point the principal is repaid.

Real Rate

The interest rate that has been adjusted for inflation, reflecting the true cost of borrowing or real yield on an investment.

Inflation

The rate at which the comprehensive cost of goods and services inflates, sapping the buying power.

Total Percentage Return

The total return on an investment, including both capital gains and dividends, expressed as a percentage of the initial investment.