Question 1

The factor method tries to forecast sales by finding a relation between the company's sales and some other factor (or factors).

Accepted Answer

A) True 
 B)False  True

Question 2

Use the information below to answer the following questions that refer to Table B-2. Based on the information in Table B-2, and given that the gross margin percent is 25%, what is the cost of sales?
$$\begin{array} { l c } 
 { \text { Table B-2 } } & \
\text { Gross sales } & \$ 240,000 \
\text { Returns } & \$ 20,000 \
\text { Allowances } & \$ 20,000 \
\text { Gross margin } & 25 \% \
\text { Beginning inventory } & \$ 50,000 \
\text { Ending inventory } & \$ 50,000 \
\text { Expenses } & \$ 40,000 \
\text { Markdowns } & \$ 30,000 \
\text { Investment } & \$ 50,000
\end{array}$$

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. B

Question 3

In making a purchase from a wholesaler, a retailer is told that a certain item will earn a 100 percent markup on cost. What markup on selling price will this be?

Accepted Answer

A)  75% 
B)  100% 
C)  66 2/3% 
D)  200% 
E)  50% 
A)  75% 
B)  100% 
C)  66 2/3% 
D)  200% 
E)  50% E

Question 4

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 5

If a wholesaler takes a 50 percent markup on its cost, this is equal to a ______________ markup on selling price.

Accepted Answer

A)  33 1/3% 
B)  200% 
C)  100% 
D)  20% 
E)  50% 
A)  33 1/3% 
B)  200% 
C)  100% 
D)  20% 
E)  50%

Question 6

Which of the following would NOT be shown on a firm's "balance sheet"?

Accepted Answer

A)  Liabilities 
B)  Net worth 
C)  Assets 
D)  Net sales 
E)  All of these would be on a firm's balance sheet. 
A)  Liabilities 
B)  Net worth 
C)  Assets 
D)  Net sales 
E)  All of these would be on a firm's balance sheet.

Question 7

The main purpose of the "operating statement" is to:

Accepted Answer

A)  show which products are most profitable. 
B)  show the sources of sales data. 
C)  calculate the net profit for the company and present data to support the net profit figure. 
D)  show which customers are most profitable. 
E)  All of these alternatives are correct. 
A)  show which products are most profitable. 
B)  show the sources of sales data. 
C)  calculate the net profit for the company and present data to support the net profit figure. 
D)  show which customers are most profitable. 
E)  All of these alternatives are correct.

Question 8

True Blue, Inc.--which had a net profit of $200,000 last year--had a gross margin of 40 percent and expenses of 30 percent. What were its net sales in dollars?

Accepted Answer

A)  $700,000 
B)  $2,000,000 
C)  $1,000,000 
D)  $800,000 
E)  Cannot be determined with data given. 
A)  $700,000 
B)  $2,000,000 
C)  $1,000,000 
D)  $800,000 
E)  Cannot be determined with data given.

Question 9

A forecast of target market potential:

Accepted Answer

A)  Is an estimate of the expected conditions in the national economy. 
B)  Is an estimate of what an individual firm expects to sell to a market segment. 
C)  Is an estimate of what a whole market segment might buy. 
D)  Is an estimate of the expected conditions in an industry. 
E)  None of these alternatives is correct. 
A)  Is an estimate of the expected conditions in the national economy. 
B)  Is an estimate of what an individual firm expects to sell to a market segment. 
C)  Is an estimate of what a whole market segment might buy. 
D)  Is an estimate of the expected conditions in an industry. 
E)  None of these alternatives is correct.

Question 10

"Return on investment" means:

Accepted Answer

A)  sales divided by investment. 
B)  investment divided by net sales. 
C)  net profit before taxes divided by the assets used to make the profit. 
D)  net profit after taxes divided by the investment used to make the profit. 
E)  None of the alternatives is correct. 
A)  sales divided by investment. 
B)  investment divided by net sales. 
C)  net profit before taxes divided by the assets used to make the profit. 
D)  net profit after taxes divided by the investment used to make the profit. 
E)  None of the alternatives is correct.

Question 11

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 12

The basic formula used in the factor method of sales forecasting is: some variable, such as past sales, times some related factor equals the sales forecast.

Accepted Answer

A) True 
 B)False

Question 13

Use the information below to answer the following questions that refer to Table B-2. Based on the information in Table B-2, the net profit is:
$$\begin{array} { l c } 
 { \text { Table B-2 } } & \
\text { Gross sales } & \$ 240,000 \
\text { Returns } & \$ 20,000 \
\text { Allowances } & \$ 20,000 \
\text { Gross margin } & 25 \% \
\text { Beginning inventory } & \$ 50,000 \
\text { Ending inventory } & \$ 50,000 \
\text { Expenses } & \$ 40,000 \
\text { Markdowns } & \$ 30,000 \
\text { Investment } & \$ 50,000
\end{array}$$

Accepted Answer

A)  $15,500. 
B)  $10,000. 
C)  $65,000. 
D)  $23,000. 
E)  a loss of $90,000. 
A)  $15,500. 
B)  $10,000. 
C)  $65,000. 
D)  $23,000. 
E)  a loss of $90,000.

Question 14

What net sales are required to obtain a stockturn rate of 5--given an average inventory at cost of $100,000 and a gross margin of 50 percent?

Accepted Answer

A)  $100,000 
B)  $1,500,000 
C)  $600,000 
D)  $1,000,000 
E)  $400,000 
A)  $100,000 
B)  $1,500,000 
C)  $600,000 
D)  $1,000,000 
E)  $400,000

Question 15

Market potential refers to how much a whole market segment will buy while sales forecast refers to how much one firm hopes to sell to that market segment.

Accepted Answer

A) True 
 B)False

Question 16

Use the information below to answer the following questions that refer to Table B-1. Based on the information in Table B-1, and assuming a 50 percent tax on net profit, the return on investment is:
$$\begin{array} { l c } 
 { \text { Table B-1 } } \
\text { Gross sales } & \$ 650,000 \
\text { Returns } & \$ 40,000 \
\text { Allowances } & \$ 10,000 \
\text { Markdowns } & \$ 20,000 \
\text { Beginning inventory } & \$ 50,000 \
\text { Ending inventory } & \$ 30,000 \
\text { Expenses } & 25 \% \
\text { Stockturn rate } & 10 \
\text { Investment } & \$ 250,000
\end{array}$$

Accepted Answer

A)  12.3%. 
B)  25.0%. 
C)  9.9%. 
D)  10.0%. 
E)  The return is negative because the firm had a loss. 
A)  12.3%. 
B)  25.0%. 
C)  9.9%. 
D)  10.0%. 
E)  The return is negative because the firm had a loss.

Question 17

Use the information below to answer the following questions that refer to Table B-2. Based on the information in Table B-2, net sales are:
$$\begin{array} { l c } 
 { \text { Table B-2 } } & \
\text { Gross sales } & \$ 240,000 \
\text { Returns } & \$ 20,000 \
\text { Allowances } & \$ 20,000 \
\text { Gross margin } & 25 \% \
\text { Beginning inventory } & \$ 50,000 \
\text { Ending inventory } & \$ 50,000 \
\text { Expenses } & \$ 40,000 \
\text { Markdowns } & \$ 30,000 \
\text { Investment } & \$ 50,000
\end{array}$$

Accepted Answer

A)  $140,000. 
B)  $155,000. 
C)  $200,000. 
D)  $180,000. 
E)  $220,000. 
A)  $140,000. 
B)  $155,000. 
C)  $200,000. 
D)  $180,000. 
E)  $220,000.

Question 18

Tammy Patterson is the sales rep for an area with a "Buying Power Index" (BPI) of 0.4500. If her firm's national sales forecast is $30,000,000, calculate a "reasonable" sales forecast for Tammy's area.

Accepted Answer

A)  $900,000 
B)  $90,000 
C)  $666,666 
D)  $135,000 
E)  $1,350,000 
A)  $900,000 
B)  $90,000 
C)  $666,666 
D)  $135,000 
E)  $1,350,000

Question 19

Monthly operating statements might be used to uncover unfavorable trends in sales, costs, and profit.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

The factor method tries to forecast sales by finding a relation between the company's sales and some other factor (or factors).

In making a purchase from a wholesaler, a retailer is told that a certain item will earn a 100 percent markup on cost. What markup on selling price will this be?

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

If a wholesaler takes a 50 percent markup on its cost, this is equal to a ______________ markup on selling price.

Which of the following would NOT be shown on a firm's "balance sheet"?

The main purpose of the "operating statement" is to:

True Blue, Inc.--which had a net profit of $200,000 last year--had a gross margin of 40 percent and expenses of 30 percent. What were its net sales in dollars?

A forecast of target market potential:

"Return on investment" means:

The basic formula used in the factor method of sales forecasting is: some variable, such as past sales, times some related factor equals the sales forecast.

What net sales are required to obtain a stockturn rate of 5--given an average inventory at cost of $100,000 and a gross margin of 50 percent?

Market potential refers to how much a whole market segment will buy while sales forecast refers to how much one firm hopes to sell to that market segment.

Tammy Patterson is the sales rep for an area with a "Buying Power Index" (BPI) of 0.4500. If her firm's national sales forecast is $30,000,000, calculate a "reasonable" sales forecast for Tammy's area.

Monthly operating statements might be used to uncover unfavorable trends in sales, costs, and profit.

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

Marketing39s Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

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

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

Economics Fundamentals

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Exam 20: Marketing Arithmetic

The factor method tries to forecast sales by finding a relation between the company's sales and some other factor (or factors).

In making a purchase from a wholesaler, a retailer is told that a certain item will earn a 100 percent markup on cost. What markup on selling price will this be?

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

If a wholesaler takes a 50 percent markup on its cost, this is equal to a ______________ markup on selling price.

Which of the following would NOT be shown on a firm's "balance sheet"?

The main purpose of the "operating statement" is to:

True Blue, Inc.--which had a net profit of $200,000 last year--had a gross margin of 40 percent and expenses of 30 percent. What were its net sales in dollars?

A forecast of target market potential:

"Return on investment" means:

The basic formula used in the factor method of sales forecasting is: some variable, such as past sales, times some related factor equals the sales forecast.

What net sales are required to obtain a stockturn rate of 5--given an average inventory at cost of $100,000 and a gross margin of 50 percent?

Market potential refers to how much a whole market segment will buy while sales forecast refers to how much one firm hopes to sell to that market segment.

Tammy Patterson is the sales rep for an area with a "Buying Power Index" (BPI) of 0.4500. If her firm's national sales forecast is $30,000,000, calculate a "reasonable" sales forecast for Tammy's area.

Monthly operating statements might be used to uncover unfavorable trends in sales, costs, and profit.

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

Marketing39s Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

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

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

Economics Fundamentals

Filters