14 Aug 91. General summaries of overall marketing cost data ? may hide problems rather

91. General
summaries of overall marketing cost data
? may
hide problems rather than highlighting them.
are
usually the key to identifying how to improve the marketing plan.
should
not be too detailed–since detailed analysis requires allocating costs that are
actually fixed.
are
usually enough to reveal areas where changes are needed.
All
of the above are true.

92. Marketing
cost analysis shows that one of Buildco, Inc.’s customers is unprofitable, so
Buildco should:
refuse
to sell to that customer.
? try
to determine why this customer is unprofitable.
drop
the customer and shift all fixed costs to the other customers.
assign
a new salesperson to that account.
immediately
develop a plan to sell more to that customer.

93. Using
cost analysis to analyze the money being spent by a firm is analogous to using
____________ to analyze the money coming into the firm.
? sales
analysis
traditional
accounting reports
performance
analysis
the
iceberg principle
TQM
methods

94. The
text’s “full-cost approach” to marketing cost analysis:
looks
only at each customer or product’s “contribution margin.”
? allocates
all costs to products, customers, or other categories.
looks
only at those costs which are directly related to particular alternatives.
is
misleading and should be avoided.
All
of the above.

95. The
“contribution-margin approach” to marketing cost analysis:
? considers
only those costs which are directly related to particular alternatives.
is
especially useful for estimating the long-run profit of a proposed strategy.
allocates
variable costs which are hard to measure to overhead.
is
especially useful for determining if there should be more controls on fixed
costs.
All
of the above.

96. The
“contribution margin approach” to marketing cost analysis:
allocates
all costs to products or customers.
should
always be used instead of the full-cost approach–so that fixed costs are fully
considered.
? focuses
management’s attention on variable costs rather than total costs.
assumes
that all costs must be allocated.
None
of the above.

97. Regarding
marketing cost analysis,
the
full-cost approach usually should be used as there are almost always some fixed
costs to be allocated.
? the
contribution-margin approach focuses attention on variable costs.
fixed
costs should be allocated according to the contribution-margin approach.
the
action implications will be the same whether the full-cost or
contribution-margin approach is used.
the
contribution-margin approach provides the most complete allocation of total
expenses.

98. The
main difference between the full-cost approach and the contribution-margin
approach to marketing cost analysis is:
The
contribution-margin approach uses both mechanical and logical reasoning to
allocate marketing costs.
? The
full-cost approach allocates all costs–even fixed costs–to products,
customers, or other categories.
The
contribution-margin approach allocates all costs to show how profitable various
customers are.
The
full-cost approach focuses on variable costs rather than total costs.

99. With
the “contribution-margin approach” to marketing cost analysis,
all
costs are allocated to products, customers, or other categories.
fixed
costs are allocated based on the profit contribution to the firm.
variable
costs are treated as common costs.
? common
costs which are hard to allocate are ignored.
None
of the above is true.

100. Lori
Winters, a regional sales manager, is interested in the profitability of the
different sales reps in her region. She has used a variety of different
approaches for allocating fixed sales expenses to the different sales reps, but
she reaches very different conclusions depending on which allocation approach
is used. In this case, it would be wise for Ms. Winters to supplement her other
analyses with an analysis based on
? the
contribution-margin approach.
the
full-cost approach.
the
marketing audit approach.
none
of the above.
all
of the above.

101. Regarding
the “contribution-margin approach” to marketing cost analysis, which
of the following statements is TRUE?
The
total net profit obtained with this approach is different from that obtained
using the “full-cost approach.”
It
is concerned with the amount contributed by a product or customer toward
covering variable costs–after fixed costs have been covered.
This
approach stresses the need for evaluating fixed costs.
? This
approach may suggest a different action than the “full-cost
approach.”
All
of the above are true.

102. When
the “full-cost approach” to marketing cost analysis is used,
allocating fixed costs on the basis of sales:
? may
make low-volume customers appear more profitable than they are.
increases
each customer’s contribution margin.
decreases
the profitability of the whole business.
makes
large-volume customers appear more profitable that they are.
increases
the profitability of the whole business.

103. If
one were using the “full-cost” approach to marketing cost analysis,
then allocating fixed costs on the basis of sales volume would:
make
some customers appear more profitable than they actually are.
not
be done–because only variable costs would be analyzed.
make
some products appear less profitable than they actually are.
decrease
the profitability of the whole business.
? Both
A and C are true statements.

104. Which
of the following would be the BEST reason to use the “full-cost
approach” when comparing the performance of several product managers?
Unlike
the “contribution-margin approach,” it charges managers only for the
expenses which are directly related to their operations.
This
approach is required by Federal tax laws.
It
charges each product manager only for those expenses which he controls.
It
allows management to consider only the variable costs related to different
products.
? It
makes each manager bear a share of the overhead expenses which were made for
everyone’s benefit.

105. A
company produces three product lines and a different marketing manager is
responsible for each line. Most marketing expenses are specific to each line,
but a common sales force sells all three lines. Sales reps are paid by
commission, with a different commission for each product line. In this case, in
a marketing cost analysis,
? the
contribution-margin approach would probably divide personal selling expense
based on commission expense for each product line.
a
full-cost approach would ignore commission expense since it is not a fixed
cost.
sales
commissions are a variable expense and would not be considered in the
contribution-margin approach.
the
full-cost approach would be easier to do if all sales reps were paid a straight
salary.
None
of the above is true.

106. When
deciding how to evaluate costs, a marketing manager should realize that
? the
best method for dealing with fixed costs depends on the objectives of the analysis.
according
to the iceberg principle too much detail in cost analysis obscures the big
problems by calling attention to the superficial problems.
the
full cost approach is misleading and should not be used.
the
contribution-margin approach ignores necessary fixed costs and should not be
used.
None
of the above.

107. Which
of the following statements about the contribution-margin approach is FALSE?
It
is concerned with the amount contributed by an item or group of items toward
covering fixed costs.
This
approach suggests that it is not necessary to consider all costs in all
situations.
? Top
management almost always finds this approach more useful than full-cost
analysis.
This
approach frequently leads to data which suggest a different decision than might
be indicated by the full-cost approach.
It
focuses on controllable costs–rather than on total costs.

108. A
systematic, critical, and unbiased review and appraisal of the basic objectives
and policies of the marketing function–and of the organization, methods,
procedures, and people employed to implement the policies–is called a:
MIS
report.
? marketing
audit.
management
review.
marketing
information system.
marketing
analysis survey.

109. A
marketing audit should help determine if:
current
marketing strategies are good ones.
the
company’s marketing objectives are reasonable.
implementation
of a marketing program was effective.
? All
of the above.
None
of the above.

110. A
marketing audit is:
an
evaluation of day-to-day marketing operations.
an
analysis of the profitability of all profit centers.
a
review of a marketing program during a crisis.
a
detailed look by a CPA at how the company’s marketing costs are allocated.
? a
systematic, critical, and unbiased review and appraisal of the objectives and
policies of the marketing function.111. A
“marketing audit” should: be
done by someone inside the finance department. be
conducted whenever a crisis arises. be
conducted by the person most familiar with each of the firm’s marketing plans.? evaluate
a company’s whole marketing program on a regular basis. All
of the above. 112. Which
of the following statements about a “marketing audit” is true? A
marketing audit should be conducted only when some crisis arises. It
probably should be conducted by someone inside the marketing department who is
familiar with the whole program.? A
marketing audit should evaluate the company’s whole marketing program–not just
some parts of it. A
marketing audit should be handled by the specialist most familiar with each of
the marketing plans in the program. All
of the above are true statements.

91. General
summaries of overall marketing cost data? may
hide problems rather than highlighting them. are
usually the key to identifying how to improve the marketing plan. should
not be too detailed–since detailed analysis requires allocating costs that are
actually fixed. are
usually enough to reveal areas where changes are needed. All
of the above are true. 92. Marketing
cost analysis shows that one of Buildco, Inc.’s customers is unprofitable, so
Buildco should: refuse
to sell to that customer.? try
to determine why this customer is unprofitable. drop
the customer and shift all fixed costs to the other customers. assign
a new salesperson to that account. immediately
develop a plan to sell more to that customer. 93. Using
cost analysis to analyze the money being spent by a firm is analogous to using
____________ to analyze the money coming into the firm.? sales
analysis traditional
accounting reports performance
analysis the
iceberg principle TQM
methods 94. The
text’s “full-cost approach” to marketing cost analysis: looks
only at each customer or product’s “contribution margin.”? allocates
all costs to products, customers, or other categories. looks
only at those costs which are directly related to particular alternatives. is
misleading and should be avoided. All
of the above. 95. The
“contribution-margin approach” to marketing cost analysis:? considers
only those costs which are directly related to particular alternatives. is
especially useful for estimating the long-run profit of a proposed strategy. allocates
variable costs which are hard to measure to overhead. is
especially useful for determining if there should be more controls on fixed
costs. All
of the above. 96. The
“contribution margin approach” to marketing cost analysis: allocates
all costs to products or customers. should
always be used instead of the full-cost approach–so that fixed costs are fully
considered.? focuses
management’s attention on variable costs rather than total costs. assumes
that all costs must be allocated. None
of the above. 97. Regarding
marketing cost analysis, the
full-cost approach usually should be used as there are almost always some fixed
costs to be allocated.? the
contribution-margin approach focuses attention on variable costs. fixed
costs should be allocated according to the contribution-margin approach. the
action implications will be the same whether the full-cost or
contribution-margin approach is used. the
contribution-margin approach provides the most complete allocation of total
expenses. 98. The
main difference between the full-cost approach and the contribution-margin
approach to marketing cost analysis is: The
contribution-margin approach uses both mechanical and logical reasoning to
allocate marketing costs.? The
full-cost approach allocates all costs–even fixed costs–to products,
customers, or other categories. The
contribution-margin approach allocates all costs to show how profitable various
customers are. The
full-cost approach focuses on variable costs rather than total costs. 99. With
the “contribution-margin approach” to marketing cost analysis, all
costs are allocated to products, customers, or other categories. fixed
costs are allocated based on the profit contribution to the firm. variable
costs are treated as common costs.? common
costs which are hard to allocate are ignored. None
of the above is true. 100. Lori
Winters, a regional sales manager, is interested in the profitability of the
different sales reps in her region. She has used a variety of different
approaches for allocating fixed sales expenses to the different sales reps, but
she reaches very different conclusions depending on which allocation approach
is used. In this case, it would be wise for Ms. Winters to supplement her other
analyses with an analysis based on? the
contribution-margin approach. the
full-cost approach. the
marketing audit approach. none
of the above. all
of the above. 101. Regarding
the “contribution-margin approach” to marketing cost analysis, which
of the following statements is TRUE? The
total net profit obtained with this approach is different from that obtained
using the “full-cost approach.” It
is concerned with the amount contributed by a product or customer toward
covering variable costs–after fixed costs have been covered. This
approach stresses the need for evaluating fixed costs.? This
approach may suggest a different action than the “full-cost
approach.” All
of the above are true. 102. When
the “full-cost approach” to marketing cost analysis is used,
allocating fixed costs on the basis of sales:? may
make low-volume customers appear more profitable than they are. increases
each customer’s contribution margin. decreases
the profitability of the whole business. makes
large-volume customers appear more profitable that they are. increases
the profitability of the whole business. 103. If
one were using the “full-cost” approach to marketing cost analysis,
then allocating fixed costs on the basis of sales volume would: make
some customers appear more profitable than they actually are. not
be done–because only variable costs would be analyzed. make
some products appear less profitable than they actually are. decrease
the profitability of the whole business.? Both
A and C are true statements. 104. Which
of the following would be the BEST reason to use the “full-cost
approach” when comparing the performance of several product managers? Unlike
the “contribution-margin approach,” it charges managers only for the
expenses which are directly related to their operations. This
approach is required by Federal tax laws. It
charges each product manager only for those expenses which he controls. It
allows management to consider only the variable costs related to different
products.? It
makes each manager bear a share of the overhead expenses which were made for
everyone’s benefit. 105. A
company produces three product lines and a different marketing manager is
responsible for each line. Most marketing expenses are specific to each line,
but a common sales force sells all three lines. Sales reps are paid by
commission, with a different commission for each product line. In this case, in
a marketing cost analysis,? the
contribution-margin approach would probably divide personal selling expense
based on commission expense for each product line. a
full-cost approach would ignore commission expense since it is not a fixed
cost. sales
commissions are a variable expense and would not be considered in the
contribution-margin approach. the
full-cost approach would be easier to do if all sales reps were paid a straight
salary. None
of the above is true.106. When
deciding how to evaluate costs, a marketing manager should realize that? the
best method for dealing with fixed costs depends on the objectives of the analysis. according
to the iceberg principle too much detail in cost analysis obscures the big
problems by calling attention to the superficial problems. the
full cost approach is misleading and should not be used. the
contribution-margin approach ignores necessary fixed costs and should not be
used. None
of the above. 107. Which
of the following statements about the contribution-margin approach is FALSE? It
is concerned with the amount contributed by an item or group of items toward
covering fixed costs. This
approach suggests that it is not necessary to consider all costs in all
situations.? Top
management almost always finds this approach more useful than full-cost
analysis. This
approach frequently leads to data which suggest a different decision than might
be indicated by the full-cost approach. It
focuses on controllable costs–rather than on total costs. 108. A
systematic, critical, and unbiased review and appraisal of the basic objectives
and policies of the marketing function–and of the organization, methods,
procedures, and people employed to implement the policies–is called a: MIS
report.? marketing
audit. management
review. marketing
information system. marketing
analysis survey. 109. A
marketing audit should help determine if: current
marketing strategies are good ones. the
company’s marketing objectives are reasonable. implementation
of a marketing program was effective.? All
of the above. None
of the above. 110. A
marketing audit is: an
evaluation of day-to-day marketing operations. an
analysis of the profitability of all profit centers. a
review of a marketing program during a crisis. a
detailed look by a CPA at how the company’s marketing costs are allocated.? a
systematic, critical, and unbiased review and appraisal of the objectives and
policies of the marketing function. be
done by someone inside the finance department. be
conducted whenever a crisis arises. be
conducted by the person most familiar with each of the firm’s marketing plans.? evaluate
a company’s whole marketing program on a regular basis. All
of the above. 112. Which
of the following statements about a “marketing audit” is true? A
marketing audit should be conducted only when some crisis arises. It
probably should be conducted by someone inside the marketing department who is
familiar with the whole program.? A
marketing audit should evaluate the company’s whole marketing program–not just
some parts of it. A
marketing audit should be handled by the specialist most familiar with each of
the marketing plans in the program. All
of the above are true statements.

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