Regarding Marketing Cost Analysis

question 122

Multiple Choice

Regarding marketing cost analysis,

• A) the full-cost approach usually should be used as there are almost always some fixed costs to be allocated.
• B) the contribution-margin approach focuses attention on variable costs.
• C) fixed costs should be allocated according to the contribution-margin approach.
• D) the action implications will be the same whether the full-cost or contribution-margin approach is used.
• E) the contribution-margin approach provides the most complete allocation of total expenses.

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Definitions:

Unlevered Cost

The cost of financing a project or investment without the impact of debt, or the cost of capital for a company with no debt.

Cost of Equity

The rate of return a company is expected to pay to its shareholders for their investment in the company's equity, often estimated using the Capital Asset Pricing Model (CAPM).

Pre-Tax Cost

The expense or cost incurred by an entity that has not yet been reduced by considerations for taxes.