S3 Price Change Analysis

1. S3 Price Change Analysis
   
   Using S3 price change at a current contribution margin% of 20% how much must sales increase by for a price reduction of 6% to be worth while? By more than:

   20%

   25%

   30%

   42.9%

   Other

2 points

QUESTION 2

1. The well managed firm tracks and broadcasts across its organization which of the following

   Truly unsolicited letters and e-mails of thanks

   Letters and e-mails complaining, ranking of complaints

   Returns and reasons for returns ranked

   b and c above

   All of the above

2 points

QUESTION 3

1. Please indicate whether the following costs are fixed or variable:
   
   Advertising campaign expenses

   Fixed

   Variable

2 points

QUESTION 4

1. Coupon redemption cost paid to retailers

   Fixed

   Variable

2 points

QUESTION 5

1. The Eco-spout entrepreneur wishes to pay himself and his son $25,000 each. He also plans $20,000 in extra fixed selling costs and a decrease in estimated variable sales costs from 10 cents down to five cents a unit. What is the new target share of reached market needed in the first year?

   41.5%

   48.3%

   58.6%

   68.4%

   Other

2 points

QUESTION 6

1. S8 Relationship Analysis
   
   In the Conference Board study, S8, substitution % explains what percent of profit margin?

   37%

   64%

   76%

   84%

   Other

2 points

QUESTION 7

1. S4 Price Setting Analysis
   
   In calculating break-even you divide total fixed costs by :

   Price

   Volume sold

   Price plus variable costs

   Price minus variable costs

   None of the above

2 points

QUESTION 8

1. Senior management is instructed by the board that shareholderRRR is 15%. Under this assumption how much shareholder capital does a product redesign create?

   $40,493

   $59,722

   $82,946

   Other

2 points

QUESTION 9

1. Royalty paid to patent holder

   Fixed

   Variable

2 points

QUESTION 10

1. Cost of applying for a patent

   Fixed

   Variable

2 points

QUESTION 11

1. Activity Based Costing is growing in popularity.

   True

   False

2 points

QUESTION 12

1. S7 Customer Profitability Analysis
   
   Let us assume that the annual profit from a credit-card customer is year 1 $50, year 2 $70, year 3 $80, year 4 $95, year 5, $100, year 6 $110, year 7 $115. Each year there is a 100% chance of keeping the customer and the RRR is 20%. What is the present value of this customer over the next seven years?

   $290

   $291

   $292

   $293

   $294

2 points

QUESTION 13

1. Process improvement multiplies increased customer satisfaction effects.

   True

   False

2 points

QUESTION 14

1. There are four major drivers of customer profitability

   True

   False

2 points

QUESTION 15

1. If a six-pack of a fruit-soda sells for $6 retail and the retailer's margin is 25% and the wholesaler-distributor margin is 33% then what is the manufacturer's price?

   $1

   $1.50

   $2

   $3.02

   Other

2 points

QUESTION 16

1. A study of what was included in marketing costs found that the cost of physical distribution was included 75% of the time

   True

   False

2 points

QUESTION 17

1. The best way of assessing the profitability of a customer is to first compute the average cost of an item sold and hence its average profitability and then multiply this product item profitability by the amount of the product that each customer buys. The mix of product purchases by the customer will then help determine customer profitability.

   True

   False

2 points

QUESTION 18

1. Please indicate which of the following sets of measures fit in the bottom right of the Balanced Scorecard framework:

   Owner outcome measures

   Learning and change measures

   Key internal business process measures

   Customer outcome measures

2 points

QUESTION 19

1. Target profit feasibility analysis:

   Computes what your profit will be given your forecast sales

   Computes the sales and share required to meet your target profit

   Computes how change in market share change profit

   All of the above

   None of the above

2 points

QUESTION 20

1. He also is able to get a better average variable manufacturing cost of 25 cents per unit and not 40 cents. He also decides to sell the unit wholesale for $0.99 and not $0.90. What is the new target share of reached market needed in the first year?

   38%

   41.9%

   45.6%

   28.7%

   Other

2 points

QUESTION 21

1. Delivery costs of orders to merchants

   Fixed

   Variable

2 points

QUESTION 22

1. The key business processes in marketing that drive shareholder value are the PDM processes, SCM processes and CRP processes.

   True

   False

2 points

QUESTION 23

1. The focus of marketing should be on sales and market share as the key marketing performance metrics.

   True

   False

2 points

QUESTION 24

1. If the actual market size is 70,000,000 what is the Total variance?

   -$308,000

   $2,160,000

   $1,280,000

   $1,702,000

   Other

2 points

QUESTION 25

1. With this larger quantity sold the variable cost of materials and production labor costs were each 20% lower than expected. What is the new Contribution variance?

   -$720,000

   $1,232,000

   $3,242,000

   $2,000,000

   Other

2 points

QUESTION 26

1. Managers who do not think in terms of shareholder value probably make decisions that generate lower shareholder value than those who think about shareholder value.

   True

   False

2 points

QUESTION 27

1. Long standing, loyal customers can be more expensive to serve and often get more price discounts.

   True

   False

2 points

QUESTION 28

1. S5 Product-line Analysis
   
   In the product-line spreadsheet case (page 4), the manager of the new product says that if her marketing budget was increased to $750,000 from $250,000 then 10 points of share rather than 2 points of share can be gained from the competition. What would be the new marginal gain in pretax profit if this happened?

   -$100,000

   0

   $100,000

   $640,000

   Other

2 points

QUESTION 29

1. At a current contribution margin% of 80% how much must sales decrease by for a price increase of 6% not to be worth while? By more than:

   6.0%

   7.0%

   8.0%

   9.0%

   Other

2 points

QUESTION 30

1. Marketing fixed costs were $200,000 more than planned but overhead costs were $100,000 less than expected. What was the Fixed Cost variance?

   -$200,000

   -$100,000

   $0

   $100,000

   Other

2 points

QUESTION 31

1. What is the customer PV if the chance of keeping the customer from year to year is 60%?

   $87

   $88

   $89

   $102

   $107

2 points

QUESTION 32

1. Please indicate which of the following sets of measures fit in the bottom left of the Balanced Scorecard framework:

   Owner outcome measures

   Learning and change measures

   Key internal business process measures

   Customer outcome measures

2 points

QUESTION 33

1. By keeping fixed costs and start-up costs low, this company was able to follow a much less risky growth path. The company is:

   Webvan

   Peapod

   Both

2 points

QUESTION 34

1. Please indicate which of the following sets of measures fit in the middle of the Balanced Scorecard framework:

   Owner outcome measures

   Learning and change measures

   Key internal business process measures

   Customer outcome measures

2 points

QUESTION 35

1. Common costs have to be considered in financial reporting of results but should not be used in decision-making.

   True

   False

2 points

QUESTION 36

1. Which of the following statements is correct:

   Supply metrics drive process metrics that drive demand metrics.

   Process metrics drive supply metrics and demand metrics.

   Demand metrics drive supply metrics that drive process metrics.

2 points

QUESTION 37

1. Which of the following statements about the customer service feedback effect is false?

   A decrease in employee benefits and wages leads to a decrease in employee morale

   An increase in employee morale leads to an increase in service quality

   An increase in customer satisfaction & demand leads to increased rewards to employees

   A one time bonus can trigger a positive feedback effect

   A feedback-effect always produces positive outcomes.

2 points

QUESTION 38

1. The role of all managers who are economic agents of owners is to manage projects, products and services that increase owner equity.

   True

   False

2 points

QUESTION 39

1. Please indicate which of the following sets of measures fit at the top in the Balanced Scorecard framework:

   Owner outcome measures

   Learning and change measures

   Key internal business process measures

   Customer outcome measures

2 points

QUESTION 40

1. S1 Variance Analysis Spreadsheet
   
   Volume variance is market size variance plus market share variance

   True

   False

2 points

QUESTION 41

1. S2 Margin Analysis
   
   A product is sold by a retailer to the consumer for $80. The retailer buys the product from a wholesaler for $60 and the wholesaler buys the product from the manufacturer for $30. What is the wholesale margin percentage?

   25%

   33%

   50%

   Other

2 points

QUESTION 42

1. What if a marketing budget of $750,000 would gain 8 points of share and 80% of the estimated product item share of growth. What would now be the new marginal gain in pretax profit?

   $110,000

   $111,000

   $275,000

   $1,173,000

   Other

2 points

QUESTION 43

1. The relationship between songs purchased and Facebook time is driven by one extreme observation?

   True

   False

2 points

QUESTION 44

1. Every time a new product or service is introduced, it takes a while for a company to learn to make it efficiently.

   True

   False

2 points

QUESTION 45

1. Only a few brands are driving most of the relationship between substitution% and profit margin?

   True

   False

2 points

QUESTION 46

1. At a current contribution margin% of 20% how much must sales decrease by for a price increase of 6% not to be worth while? By more than:

   16%

   16.5%

   16.7%

   23.1%

   Other

2 points

QUESTION 47

1. A surfer making and selling surf-boards has fixed costs of $10,000 and his average variable cost. Is $100 in labor costs and $100 in materials costs. He sells them to a local surf shop for $300 who sells them to customers for $400. The surfer wants to make an annual profit of $10,000 on the business. How many surf boards does he need to sell?

   50

   100

   150

   200

   300

2 points

QUESTION 48

1. S6 Marketing Mix Analysis
   
   In the S6 Marketing Mix Table (line 195), the sales promotion people say that their last short-term promotion campaign led to new trial and permanent switching of buyers of competitive products to our brand and that the enduring effect in years 2-5 should be assumed to be 20% of the first year Cash Flow/Profits. What is the new IRR under this assumption?

   56%

   62%

   67%

   Other

2 points

QUESTION 49

1. The PV of a value in year i is:

   the value in year i divided by, one plus the Rate raised to the power of i.

   the value in year i divided by one raised to the power of i plus the Rate.

   the value in year i raised to the power of i divided by one plus the Rate.

   none of the above

2 points

QUESTION 50

1. At a current contribution margin% of 80% how much must sales increase by for a price reduction of 6% to be worth while? By more than:

   8.1%

   9.4%

   10.3%

   11.7%

   Other

2 points