Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 14 - Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis - Assignment Material - Questions - Page 578: 14-10

Answer

I agree. Allocating fixed costs to individual customers can distort the true cost of serving each customer and may not provide relevant information for pricing decisions. Fixed costs should typically be considered at a higher, more aggregated level of analysis, such as by product or department, rather than at the individual customer level.

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