Question

​Marketing, selling,​ distribution, and administrative​ expenses: A. can be traced through causal relationships to products. B. are usually incurred through a single distribution channel. C. are independent of volume and product mix. D. do not work well with activity based costing.

Answer 1

Answer:

C) are independent of volume and product mix.

Explanation:

This is true because marketing, sales, distribution and administrative expenses are generally mixed costs. That means that they are part variable and part fixed.

For example, most salespeople's salary consists of a small fixed amount and a percent per total sales made.

Distribution costs also vary because generally when you purchase a truck, the largest cost is the truck itself, and the driver also gets paid on a monthly basis, insurance, etc., but other costs like fuel and maintenance costs vary depending on how much the trucks are driven, so they depend on the volume distributed.

Administrative expenses are also mostly fixed, but they might include bonuses for good performance which depend on total sales, and other expenses that might increase when total sales increase.

Finally marketing expenses are generally determined as a percentage of the expected sales revenue generated by the products. There are several ways to determine marketing expenses, but they all are based on a fixed amount (e.g. cost of producing an advertisement) and variable factors like market share or sales growth. E.g. you will advertise more intensively in the areas where your product sells better.