Report of the Committee on Cost and Profitability Analyses for Marketing.

Abstract The article highlights the report of the Committee on Cost and Profitability Analyses for Marketing of the American Accounting Association. The charge made to this committee is most relevant in an era which finds an increasing proportion of firms' expenditures being made in marketing activities as they often attempt to differentiate more standardized products through marketing efforts. Prior to suggesting new approaches to the analysis of marketing costs, insight can be gained through a brief summary of the current state of marketing cost accounting. The suggested accrual or deferral of direct action promotional expenses to provide a better matching of income and expenses with stated goals can usually be justified under existing accounting principles governing accrual and deferrals. Price variances are the differences caused by actual price policies and price administration differing from those included in the sales plan. There is no unique way to classify or categorize the operations research problem. Decision theory problems enable the use of subjective or individual probabilities involving the judgment and experience of a decision maker in a structured approach to determine rational and optimum strategy.