The Main Difference Between the Full-Cost Approach and the Contribution-Margin

question 105

Multiple Choice

The main difference between the full-cost approach and the contribution-margin approach to marketing cost analysis is:

• A) The contribution-margin approach uses both mechanical and logical reasoning to allocate marketing costs.
• B) The full-cost approach allocates all costs-even fixed costs-to products, customers, or other categories.
• C) The contribution-margin approach allocates all costs to show how profitable various customers are.
• D) The full-cost approach focuses on variable costs rather than total costs.

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Definitions:

Product Shortage

A situation where the demand for a product exceeds the supply available in the market.

Quantity Demanded

The total amount of a good that consumers are willing and able to purchase at a given price in a specified period.

Quantity Supplied

The complete quantity of a product or service that suppliers are prepared to offer for sale at an established price during a defined timeframe.

Price Of Product

The amount a customer pays to acquire a product or service.