Question 1

The three main components of an operating statement are sales, costs, and profit or loss.

Accepted Answer

A) True 
 B)False

Question 2

The term "net profit" refers to the amount the company has earned from its operations during a particular period.

Accepted Answer

A) True 
 B)False

Question 3

The "jury of executive opinion" method of sales forecasting combines the opinions of experienced executives in a firm.

Accepted Answer

A) True 
 B)False

Question 4

"Market potential" is:

Accepted Answer

A)  what a whole market segment might buy. 
B)  how much a firm hopes to sell to a market segment. 
C)  how much an industry hopes to sell to a market segment. 
D)  an estimate of the national income for the coming year. 
E)  All of the above. 
A)  what a whole market segment might buy. 
B)  how much a firm hopes to sell to a market segment. 
C)  how much an industry hopes to sell to a market segment. 
D)  an estimate of the national income for the coming year. 
E)  All of the above.

Question 5

The cost of sales for a company is $400,000 and its net sales are $800,000. What would its stockturn rate be if its average inventory at cost is $100,000?

Accepted Answer

A)  3 
B)  2 
C)  1 
D)  8 
E)  4 
A)  3 
B)  2 
C)  1 
D)  8 
E)  4

Question 6

A marketing researcher estimates that all the users and potential users of a special industrial tool might buy about $600,000 worth next year. The marketing manager for one firm that sells the tools knows that her company sold $80,000 worth of tools last year and that her profits will be about 10 percent of sales. The market potential in this case is probably about:

Accepted Answer

A)  $16,000 
B)  $600,000 
C)  $80,000 
D)  $8,000 
A)  $16,000 
B)  $600,000 
C)  $80,000 
D)  $8,000

Question 7

Aiwa Industries sells directly to auto parts retailers and is trying to set a price on a radar detector so that its retailers can sell it for $100. If the retailers need a 30 percent markup--and Aiwa can produce the item for $35--what markup could Aiwa take for itself?

Accepted Answer

A)  35% 
B)  100% 
C)  30% 
D)  70% 
E)  50% 
A)  35% 
B)  100% 
C)  30% 
D)  70% 
E)  50%

Question 8

Relying on trend extension approaches for forecasting sales is a lot like going down a river in a canoe and steering the canoe

Accepted Answer

A)  with help from radar equipment that detects obstacles before you get close to them. 
B)  only when you encounter a waterfall. 
C)  by looking backwards up the river. 
D)  based on a detailed map of the river someone else has drawn. 
E)  based on directions from others in the canoe who are looking ahead for rapids. 
A)  with help from radar equipment that detects obstacles before you get close to them. 
B)  only when you encounter a waterfall. 
C)  by looking backwards up the river. 
D)  based on a detailed map of the river someone else has drawn. 
E)  based on directions from others in the canoe who are looking ahead for rapids.

Question 9

The accuracy of any sales forecast depends on whether the firm selects and implements a marketing mix that turns these opportunities into sales and profits.

Accepted Answer

A) True 
 B)False

Question 10

Gross margin (or gross profit) is the amount left over after the cost of sales is subtracted from gross sales.

Accepted Answer

A) True 
 B)False

Question 11

A marketing researcher estimates that during the next year a market's total purchases of a new product will be $250,000. One firm expects to sell $110,000 worth. It knows that its profits will be about 10 percent of its sales. This firm's sales forecast is:

Accepted Answer

A)  $90,000 
B)  $250,000 
C)  $110,000 
D)  $11,000 
E)  There is not enough information to tell. 
A)  $90,000 
B)  $250,000 
C)  $110,000 
D)  $11,000 
E)  There is not enough information to tell.

Question 12

Charles Mann, the manager of Sparkle Toothpaste, is estimating how many units of toothpaste his firm will be able to sell to young males in the 18-24 age group in his county. In short, he is

Accepted Answer

A)  preparing a revenue report. 
B)  making a sales forecast. 
C)  determining the market potential. 
D)  estimating customer loyalty. 
E)  determining the sales budget. 
A)  preparing a revenue report. 
B)  making a sales forecast. 
C)  determining the market potential. 
D)  estimating customer loyalty. 
E)  determining the sales budget.

Question 13

A sales forecast is an estimate of how much an industry or firm hopes to sell to a market segment.

Accepted Answer

A) True 
 B)False

Question 14

A drugstore buys toothpaste from its wholesaler for $30.00 a case. This retailer uses a 25 percent markup. The retail selling price for a case of the toothpaste will be:

Accepted Answer

A)  $37.50 
B)  $120.00 
C)  $40.00 
D)  $22.50 
E)  There is not enough information to tell. 
A)  $37.50 
B)  $120.00 
C)  $40.00 
D)  $22.50 
E)  There is not enough information to tell.

Question 15

When calculating operating ratios from an operating statement, the denominator is usually net profit.

Accepted Answer

A) True 
 B)False

Question 16

A marketing manager who uses SALES AND MARKETING MANAGEMENT'S "Buying Power Index" (BPI) to forecast sales is using the:

Accepted Answer

A)  factor method (using several factors). 
B)  NAICS code method. 
C)  factor method (using one factor). 
D)  trend management method. 
E)  substitute method. 
A)  factor method (using several factors). 
B)  NAICS code method. 
C)  factor method (using one factor). 
D)  trend management method. 
E)  substitute method.

Question 17

A marketing manager knows that the current market potential for his company's product is close to $1,000,000. He knows that the market is growing at about 20 percent a year, and that his firm usually wins about 25 percent of the total sales. A market analyst forecasts that the company should have $800,000 in sales next year.

Accepted Answer

A)  The sales manager should worry that his competitors seem to be getting stronger. 
B)  The marketing manager should not make any plans based on the forecast, since he knows it must be way off. 
C)  The marketing manager should plan on selling less dollar volume next year. 
D)  The marketing manager should be disappointed that his sales are not projected to grow at a rate as fast as the market. 
A)  The sales manager should worry that his competitors seem to be getting stronger. 
B)  The marketing manager should not make any plans based on the forecast, since he knows it must be way off. 
C)  The marketing manager should plan on selling less dollar volume next year. 
D)  The marketing manager should be disappointed that his sales are not projected to grow at a rate as fast as the market.

Question 18

A hardware retailer who seeks a markup of 50 percent recently bought a new item for $15.00. To determine its selling price, he/she should add ______________ to this cost.

Accepted Answer

A)  $40.00 
B)  $80.00 
C)  $10.00 
D)  $20.00 
E)  $15.00 
A)  $40.00 
B)  $80.00 
C)  $10.00 
D)  $20.00 
E)  $15.00

Question 19

Based on the information in Table B-2, and given that the gross margin percent is 25%, what is the cost of sales?

Accepted Answer

A)  $75,000. 
B)  $150,000. 
C)  $55,000. 
D)  $12,500. 
E)  $50,000. 
A)  $75,000. 
B)  $150,000. 
C)  $55,000. 
D)  $12,500. 
E)  $50,000.

Question 20

A sales forecast is an estimate of what a whole market segment will buy.

Accepted Answer

A) True 
 B)False

Exam 23: Marketing Arithmetic

The three main components of an operating statement are sales, costs, and profit or loss.

The term "net profit" refers to the amount the company has earned from its operations during a particular period.

The "jury of executive opinion" method of sales forecasting combines the opinions of experienced executives in a firm.

"Market potential" is:

The cost of sales for a company is $400,000 and its net sales are $800,000. What would its stockturn rate be if its average inventory at cost is $100,000?

Aiwa Industries sells directly to auto parts retailers and is trying to set a price on a radar detector so that its retailers can sell it for $100. If the retailers need a 30 percent markup--and Aiwa can produce the item for $35--what markup could Aiwa take for itself?

Relying on trend extension approaches for forecasting sales is a lot like going down a river in a canoe and steering the canoe

The accuracy of any sales forecast depends on whether the firm selects and implements a marketing mix that turns these opportunities into sales and profits.

Gross margin (or gross profit) is the amount left over after the cost of sales is subtracted from gross sales.

A marketing researcher estimates that during the next year a market's total purchases of a new product will be $250,000. One firm expects to sell $110,000 worth. It knows that its profits will be about 10 percent of its sales. This firm's sales forecast is:

Charles Mann, the manager of Sparkle Toothpaste, is estimating how many units of toothpaste his firm will be able to sell to young males in the 18-24 age group in his county. In short, he is

A sales forecast is an estimate of how much an industry or firm hopes to sell to a market segment.

A drugstore buys toothpaste from its wholesaler for $30.00 a case. This retailer uses a 25 percent markup. The retail selling price for a case of the toothpaste will be:

When calculating operating ratios from an operating statement, the denominator is usually net profit.

A marketing manager who uses SALES AND MARKETING MANAGEMENT'S "Buying Power Index" (BPI) to forecast sales is using the:

A hardware retailer who seeks a markup of 50 percent recently bought a new item for $15.00. To determine its selling price, he/she should add ______________ to this cost.

Based on the information in Table B-2, and given that the gross margin percent is 25%, what is the cost of sales?

A sales forecast is an estimate of what a whole market segment will buy.

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Demographic Dimensions of Global Consumer Markets

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers,wholesalers,and Their Strategy Planning

Promotion-Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Price Setting in the Business World

Implementing and Controlling Marketing Plans: Evolution and Revolution

Managing Marketings Link With Other Functional Areas

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Economics Fundamentals

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