When the "Full-Cost Approach" to Marketing Cost Analysis Is Used

question 86

Multiple Choice

When the "full-cost approach" to marketing cost analysis is used, allocating fixed costs on the basis of sales:

• A) may make low-volume customers appear more profitable than they are.
• B) increases each customer's contribution margin.
• C) decreases the profitability of the whole business.
• D) makes large-volume customers appear more profitable that they are.
• E) increases the profitability of the whole business.

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Definitions:

Non-professionals

refers to individuals who are not formally trained or certified in a particular professional field.

General Adaptation Syndrome

A theoretical model created by Hans Selye that describes the body's short-term and long-term reactions to stress, consisting of three stages: alarm, resistance, and exhaustion.

Physiological-based Solution

An approach to solving problems that relies on understanding and modifying the body's natural processes.

Alarm Reaction

The initial phase in the body’s response to stress, activating various physiological changes for fight or flight.