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Regarding the Full-Cost Vs.contribution-Margin Controversy

Question 41

Multiple Choice

Regarding the full-cost vs.contribution-margin controversy:


A) The contribution-margin approach focuses on indirect cost allocation.
B) Management decisions cannot be made on the basis of contribution-margin analysis alone.
C) Contribution-margin tells us how much a marketing unit (territory,product) contributed to cover fixed costs,but it does not give us the net profit of the unit.
D) All costs are allocated in the contribution-margin approach.
E) The final answer for a territory or product is the same in either approach,but the contribution-margin approach gives us more detail.

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