ABSTRACT
While sales analysis focuses on the results achieved, cost analysis looks at the costs incurred in producing those results and whether the returns justify the expenditures. Allocating costs by sales volume is an erroneous method, however, in that it fails to recognize the purpose for which the regional sales manager's costs were incurred, which is the reason for a functional cost analysis. The sales manager has completed the first step in a cost analysis-the manager has decided the purpose of the analysis is to isolate the profit contributions of the various sales representatives in the branch. The return produced on the assets used in each segment of the business provides sales managers with a useful variation of more traditional cost analysis procedures for evaluating and controlling various elements of the personal selling function. Marketing cost analysis attempts to isolate the costs incurred in producing various levels of sales to determine the profitability of sales by segment of the business.
