chapter 12

R&G sells lighting fixtures to homeowners, government institutions and commercial buyers. Its sales force is organizing according to customer. The following is a profit and loss statement for each division using the full-cost approach: 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?

19000

R&G sells lighting fixtures to homeowners, government institutions and commercial buyers. Its sales force is organizing according to customer. The following is a profit and loss statement for each division using the full-cost approach: Calculate the contribution for the homeowners division, if R&G had used the contribution-margin approach?

30000

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

The essence of marketing cost analysis is to ___________ cost data.

All of the above Gather Classify Compare Study

In the contribution margin approach, any excess revenues over costs

Contributes to common costs and profits

ROAM (return on assets managed) equals:

Contribution as a percentage of sales times the asset 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

Marketing cost analysis can be used by sales managers to

Deploy the firm's salespeople most effectively Assess output/input relationships by product Assess output/input relationships by territory Assess output/input relationships by customer

R&G sells lighting fixtures to homeowners, government institutions and commercial buyers. Its sales force is organizing according to customer. The following is a profit and loss statement for each division using the full-cost approach: What would an advocate of the full-cost approach to marketing cost analysis do with this information?

Eliminate the division that sells to homeowners

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 representative's compensation is an example of a(n):

Indirect cost and general expense

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

Lifetime value of the customer

The most likely explanation for Sims'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

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

None of the above

How does Angellini, Inc., allocate its sales force commissions?

On the basis of conveyors sold

The warehousing expenses allocated to each salesperson would include:

Packaging costs for each product sold

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 a 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

__________ 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

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

low gross margin

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?

non of the above

Angellini, Inc. makes three kinds of conveyors for food manufacturers in the Southeastern states—the Model 3115B, the Model 510 and the Model 610A. Based on the marketing cost analysis, it is obvious that _____ should be deleted from Angellini's product line.

none of the above

When assessing segment performance, indirect costs should

not be allocated

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

order processing

If they do profitability analysis, companies are most likely to 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