MKTG 470 Final Study Guide Part 3

Calculate the contribution for the homeowners division of R & G had used the contribution margin approach?

$30,000

If the division selling to homeowners was eliminated and the remaining costs were allocated to the commercial and institutional divisions, what would be the net profit/loss for the institutional division?

($19,000)

Which of the following statements about how a manufacturer categorizes its costs and expenses is true?

A salesperson's salary would be a direct cost for his or her territory, but an indirect cost for the product sold

Marketing cost analysis can be used by sales mangers to:

All of the above

The essence of cost analysis is to ______ cost data.

All of the above

ROAM (return on assets managed) equals:

Contribution as a percent of sales times the assets turnover rate.

Alex is struggling with his company's new financial accounting system. He knows the key is to understand how _______ so that true profitability can be determined.

Costs are allocated

A manager is using a full-cost approach, then allocating fixed costs on the basis of sales volume as a way of analyzing marketing costs. This method could

Create an environment where low-volume customers appear more profitable than they actually are

What would an advocate of the full-cost approach to marketing cost analysis do with all this information?

Eliminate the division that sells to homeowners

_______ reflect the other costs incurred in operating a business, not directly related to making the product.

Expenses

A(n) __________ is a shared cost tied to several functions or products.

Indirect cost

A company that manufactures specialized database gathering software for retailers, physicians, lawyers and anyone else that needs a database wants to do a marketing cost analysis. If it uses product as its object of measurement then a particular sales representatives compensation is an example of a(n).

Indirect cost and general expense

Tyrone is attempting to measure long-term value or profitability of his customers. Tyrone is measuring:

Lifetime value of a customer

The reason for the low profitability of the Model 610A conveyor appears to be:

Low gross margin

The most likely explanation for Sim's lower contribution margin is his:

Low sales of Model 510

Which of the following statements about marketing cost analysis is true?

Marketing cost analysis focuses on the results achieved to determine if the returns justify the expenditures.

EMI a manufacturer of aluminum conveyor belts, allocates costs such as salaries, advertising, warehouse rent, office supplies, and travel expenses. EMI uses the ____ approach to marketing cost analysis.

Net profit

A company that manufactures lighting fixtures wants to do a marketing cost analysis based on customer (home owner, commercial and institutional). Which of the following is the best example of a general expense?

None of the above

Based on the marketing cost analysis, it is obvious that _____ should be deleted from Angellini's product line:

None of the above

Based on the marketing cost analysis, it is obvious that _____ should be terminated because he produces the lowest contribution margin.

None of the above

When assessing segment performance, indirect costs should...

Not be allocated

How does Angellini Inc. allocate its sales force commissions?

On the basis of conveyors sold

Which of the following if the best example of a functional account?

Order processing

The warehousing expense allocated to each salesperson would include:

Packaging costs for each product sold

If they do profitability analysis, companies are most likely do it for...

Products

Sales managers are typically LEAST concerned with the profitability of

Products

Companies are more likely to conduct ______ analysis than profitability analysis.

Sales

The first step in conducting a cost analysis is to..

Specify the purpose for which the study is being done

All of the following are disadvantages associated with marketing cost analysis EXCEPT;

The lack of tangible profit as a result of such an analysis

The real benefit of a marketing cost analysis is:

The opportunity it provides managers to isolate segments of the business that are most profitable as well as those that generate losses.

In the contribution margin approach, any excess revenues over costs

contributes to common costs and profits