Deck 13: Sales Organization Audit and Sales Analytics

Question 1

The approach sales managers use in conducting an audit depends on all the following factors except:

A) evaluation skills of the raters
B) the availability of evaluation information
C) the education level of salespeople managed by the sales manager
D) management philosophy toward performance appraisals

Answer 1

the education level of salespeople managed by the sales manager

Question 2

The program for auditing the sales force organization includes the following areas except:

A) Sales management functions
B) Sales force organization planning system
C) Environment of the sales force organization
D) All of the above

Answer 2

All of the above

Question 3

To audit sales management functions, the following areas are included except:

A) sales force selection
B) sales force budgeting
C) sales force empowerment skills
D) sales force ethical standards

Answer 3

sales force empowerment skills

Question 4

An audit of sales management functions include the following areas are except:

A) sales managers education level
B) sales force territory management
C) sales force quotas
D) selling costs

Question 5

To audit the sales force organization planning system, the following areas are included except:

A) sales force goals and objectives
B) Development of the sales management program
C) Deployment of the sales management program
D) all the above

Question 6

An audit the sales force organization planning system include the following areas are except:

A) Deployment of the sales management program
B) Development of the sales management program
C) analysis of the target market
D) sales force goals and objectives

Question 7

Auditing the environment of the sales force organization includes the following areas are except:

A) competitive environment
B) geographical environment
C) political-legal environment
D) economic environment

Question 8

Auditing the environment of the sales force organization includes the following areas are except:

A) technological environment
B) economic environment
C) socio-cultural environment
D) all the above

Question 9

With respect to analyzing the productivity and profitability of sales force efforts, all of the statements below are true, except:

A) marketing costs are really a subcategory of selling costs
B) It usually takes a long time to complete a comprehensive assessment of the sales department's effectiveness and efficiency.
C) Because total sales provide an incomplete picture of a firm's sales patterns, sales managers also should evaluate costs and profitability at the same time to reveal strengths and weaknesses of the company's different marketing units.
D) To determine the profitability of different market segments, it's necessary first to analyze the sources of sales volume and then to subtract the costs for producing those sales.

Question 10

With respect to marketing profitability analysis of sales force efforts, all of the statements below are true, except:

A) sales managers are more interested in profitability than in costs, we'll use marketing profitability analysis to describe the overall process of sales volume, costs, and profitability analysis
B) Collecting, classifying, comparing, and evaluating an organization's sales figures is a process referred to as marketing profitability analysis.
C) Marketing profitability analysis requires an in-depth analysis of the elements making up an organization's profit-and-loss or income statements.
D) marketing profitability analysis reclassifies the traditional accounting statement expenses into cost centers according to the purposes or functions for which the expenses (costs) were incurred.

Question 11

Which of the following is not a frequently used option in how we define a sales transaction?

A) when an order is taken
B) when the accounting period ends
C) when an order is shipped
D) when a customer pays for the order

Question 12

Key considerations in sales volume analysis include all except:

A) How will we break down the sales analysis? (territory, product or customer group, etc.)
B) What will we use as our basis (or bases) of comparison? (sales in prior periods, the fiscal period's sales forecast or sales quota, etc.)
C) What information sources will we use? (customer invoices, cash register receipts, etc.)
D) When the annual report is released

Question 13

When deciding at what organizational level the sales analysis will be conducted, the following factors are not considered:

A) region
B) territory
C) organizational hierarchy
D) district

Question 14

The following factors are not considered when deciding how will we measure a sale:

A) dollars
B) number of units,
C) volume of space the product occupies on the shelf
D) percentage of total sales

Question 15

When deciding how to breakdown the sales analysis by customer type, the following factors are not considered:

A) consumer
B) industrial
C) government and institutional
D) all the above are considered

Question 16

Of the following, _____________ will be the most reliable, accurate and important single source of sales information.

A) warranty cards
B) salesperson's call reports
C) Customer invoices
D) salesperson expense reports

Question 17

Alma Molloy has recently been promoted to sales manager for a medium-sized consumer products wholesaler. She wants to find out the names of prospects and customers being called on, products sold, terms of sale, methods of payment, and mode of shipment. Which of the following sources of sales information will be most helpful to Ms. Molloy?

A) consumer diaries and salespersons' expense accounts
B) sales invoices and salespersons' call reports
C) individual customer and prospect records and warranty cards
D) warranty cards and store audits

Question 18

All the following classifications of sales data provide more meaningful information to management, except:

A) order sizes
B) salespersons
C) organizational level
D) method of sales

Question 19

It is important that all sales managers understand the "iceberg principle" because it states that:

A) analogous to the invisible 90 percent of floating icebergs which can sink mighty ships (like the Titanic), favorable total sales figures can hide unprofitable market segments and unproductive sales activities
B) large numbers of the sales force are not very productive compared to what they could be since their sales managers are cold, aloof, and insensitive to their individual needs, i.e., they act much like a floating iceberg
C) like a floating iceberg, some salespeople will initially rise above the others due to their self promotion efforts and flamboyance, yet it is the hardworking average salesperson who makes up the vast ocean of successful salespeople
D) many salespeople merely float near the surface, somewhat like icebergs, without ever attempting any in-depth penetration of their markets to obtain larger sales

Question 20

___________ costs increase directly with the number of sales calls (order getting cost).

A) standard
B) variable
C) direct selling
D) indirect selling

Question 21

The "concentration principle" suggests that:

A) favorable total sales figures can easily hide unprofitable market segments
B) the major portion of any organization's sales, costs or profits comes from a small proportion of business segments
C) target markets with high potential are concentrated in sparsely populated geographical areas
D) sales force efforts should be concentrated on only one type of customer

Question 22

All of the following are reasons for the long neglect of marketing cost analyses by corporate accounting systems except

A) lack of marketing cost standards
B) inability to collect and analyze the huge volume of marketing data
C) inadequate communication between marketing and accounting managers
D) lack of contribution of marketing to overall corporate success

Question 23

Marketing cost can be classified into two categories: (1) order getting and (2) order filling costs. Which of the following is not an order getting cost?

A) advertising
B) order processing
C) marketing research
D) sales promotion

Question 24

To conduct a marketing cost (or profitability) analysis for a sales organization, sales managers should follow a systematic process which includes all but the following step

A) Specify the purpose of the analysis
B) identify functional cost centers
C) Convert functional costs into natural expenses
D) Allocate functional costs to segments

Question 25

In allocating cost to market segments, which of the statements below is incorrect?

A) Functional costs should be allocated on the basis of measurable variables that have a cause and effect relationship with the functional cost category
B) Using sales volume to allocate functional costs ensures that there is a cause and effect relationship with the performance of marketing activities
C) Traditional income statements are of minimal value to sales managers because they fail to reveal the actual costs of performing different marketing activities.
D) All of the above are incorrect

Question 26

With regard to the full costs versus contribution margin controversy, which of the statements below is incorrect?

A) under the full costs (or net profit) approach, all cost must be assigned in order to determine actual profit
B) The contribution margin approach claims that only costs that are controllable and traceable to a particular segment should be subtracted from the revenue produced by that segment
C) In marketing costs analysis, the trend factors the full-cost approach
D) With the contribution margin approach, costs are classified as either variable or fixed, then all the variable costs are deducted from sales to determine a given segment's contribution margin

Question 27

With regard to the profitability analysis, which of the statements below is incorrect?

A) Although a sales analysis is a useful control tool, it does not give the complete picture of the sales organization's effectiveness.
B) sales analysis focuses on the results generated by the sales force, but it says nothing, about the attendant costs, profitability, and return on investment that the results produced
C) Marketing costs analysis goes beyond sales volume analysis to investigate these costs incurred and the profits generated from sales volume
D) By adding the costs identified with the sales revenue from various market segments or organizational units, we can determine the profit contributions of the segments and units

Question 28

Which of the statements below is incorrect with respect to the profitability analysis?

A) It is often difficult to decide how to allocate resources, because the precise impact of expenditures on different elements of the marketing mix-like advertising, sales promotion materials, sales calls, and post-purchase service-isn't readily measurable
B) Sales managers should utilize all their resources to achieve that balance between sales volume and costs that will result in the highest long-run organizational profits
C) historically sales managers have been very cost or profit oriented
D) Sales managers, in pursuit of sales, are often reluctant to delete unprofitable products, drop unprofitable customers, or eliminate unprofitable territories

Question 29

Input-output efficiency can be defined as the relationship between:

A) indirect costs and sales
B) marketing inputs and sales
C) marketing salaries and sales
D) advertising and sales

Question 30

The relationship between inputs (marketing efforts) and outputs (sales goals or results) is known as input-output efficiency-a measure of sales organization efficiency. From the data given below, the efficiency ratio is _______________.
Data:
(1) 3,000 sales calls at $100.00
(2) 5,000 telephone calls at $1.00
(3) 15 trade magazine advertisements at $1,000
(4) Sell 2,000 new office machines ($1,000 each) @ $500 gross margin

A) 2.000
B) 3.125
C) 5.150
D) 8.500

Question 31

With regard to the marketing and accounting cost analysis, which of the statements below is incorrect?

A) Accounting cost analysis is primarily designed to provide a historical financial record of overall company operations and to ensure that production costs stay within established standards
B) accounting costs analysis is more concerned with future decisions; it seeks to learn the specific cost and profit contributions of different marketing efforts
C) marketing costs analysis is more concerned with future decisions; it seeks to learn the specific cost and profit contributions of different marketing efforts
D) Sales managers are particularly sensitive to potentially adverse effects on sales if marketing expenditures are curtailed too much

Question 32

Which of the statements below is incorrect with respect to the lack of marketing costs standards?

A) many marketing expenditures work over a period of time, making it difficult to identify sales results in one period with the marketing costs to achieve those sales
B) many marketing expenditures, such as advertising and customer service, have an immediate, readily measurable impact on sales
C) Marketing managers seldom can precisely determine the costs of inputs needed to achieve a desired sales level
D) the marketing outlays needed to produce a given level of sales are much less predictable, because results vary widely depending on the marketing mix selected for changing marketing scenarios

Question 33

Marketing costs analysis allows sales managers to improve decision making with regard to

A) allocating sales force efforts and sales department resources
B) preparing sales department budgets
C) obtaining support for the sales force from other elements of the company's marketing mix
D) all of the above

Question 34

Compute the Return on Assets Managed (ROAM) for each segment of the business using the following data:
Accounts receivable = $3,000,000
Inventory = $7,000,000
Contribution margin = $2,000,000
Sales = $5,000,000

A) 0.5
B) 0.4
C) 0.2
D) 0.3

Question 35

In order to increase the Return on Assets Managed (ROAM) of a segment, the sales manger can:

A) raise the segment contribution margin on sales
B) increase total sales while maintaining profit margins
C) decrease the dollar value of assets of the segment necessary to achieve sales
D) any of the above will increase ROAM

Question 36

For a particular product line, sales during the past year were about $15,000,000, cost of goods sold were $10,000,000, sales expenses were $1,200,000, and fixed costs were $2,000,000. What was the product line's contribution margin for the year?

A) $13,800,000
B) $3,800,000
C) $5,000,000
D) $3,000,000

Question 37

Rather than restricting sales analyses to total volume sales, sales analyses should also focus on analyses by

A) territory
B) sales representative
C) product line
D) all of the above

Question 38

Costs that do not change with sales volume are known as:

A) functional costs
B) indirect costs
C) fixed costs
D) sunk costs

Question 39

The first figures studied in sales analysis are

A) sales volume
B) sales costs
C) direct selling costs
D) indirect selling costs

Question 40

Relative to the analysis of sales volume, costs, and profits, traditional income statements can be considered as:

A) extremely beneficial
B) direct and to the point
C) limited value because they fail to reveal the costs of performing different marketing activities
D) the basic tool of analysis

Question 41

When gathering sales information for analysis, which one of the following sources would most likely provide detailed information about dollar or unit purchases by package size, brands, prices, special deals, and type of outlets where purchased.

A) warranty cards
B) store audits
C) consumer diaries
D) test markets

Question 42

With regard to collecting sales data, all of the following are true except

A) sales figures are usually reported in both dollars and units
B) sales data are frequently subcategorized by territories
C) sales data are frequently subcategorized by customer class
D) sales data by territory typically cannot be subdivided any further

Question 43

Before offering advice about what the firm should do to address any deficiencies, a sales management auditor should first acquire information for identifying the sales organization's weaknesses and strengths from sources such as:

A) internal company documents (marketing plan, sales plan, policy manuals, and surveys),
B) industry publications,
C) trade association information
D) all the above

Question 44

The sales management auditor should first acquire a wealth of information for identifying the sales organization's weaknesses and strengths and then offer advice about what the firm should do to address any deficiencies.

A) Sales personnel
B) customers
C) sales and marketing support teams,
D) all the above

Question 45

Sales volume, costs, and profitability analyses can be viewed as key determinants of overall sales force effectiveness and efficiency.

Question 46

Analyzing sales volume metrics is helpful in evaluating and controlling sales effectiveness, but neglects the profitability of sales efforts-and high volume ensures high profits.

Question 47

Costs and profitability analyses can be conducted by important market segments (customers, product lines, and territories) and organizational units.

Question 48

It's advisable that sales managers conduct a sales force audit regularly, at least once a year.

Question 49

Analyzing only revenues will provide an incomplete picture of a firm's sales patterns. Thus, sales managers also should evaluate costs and profitability at the same time to reveal strengths and weaknesses of the company's different marketing units.

Question 50

To determine the profitability of different market segments, analyze the sources of sales volume and then to add the costs for producing those sales.

Question 51

Indirect costs refer to those expenses that do not change with sales volume (e.g., salaries of the sales administration staff, office rent, and fire insurance).

Question 52

Costs versus expenses are two terms that are often used interchangeably in describing marketing costs analysis. Costs tend to be specific and directly related to volume output, while expenses are more general or indirect expenditures (e.g., we tend to say production costs and marketing expenses).

Question 53

Input-output efficiency refers to the relationship between marketing efforts (inputs) and sales (output) is a measure of a sales organization's efficiency.

Question 54

Variable costs are sometimes called common costs, which are incurred for more than one function or segment and thus must be allocated on some reasonable basis. For example, the sales manager's salary or office utilities would have to be spread among sales functions, sales territories, and other segments and, hence, are known as variable costs.

Question 55

Reclassified natural expenses into the activities or functions for which they were incurred (e.g., "salary expense" reclassified into direct selling, transportation, or advertising function salaries) are known as functional costs.

Question 56

Indirect costs refer to those expenses that can be entirely identified with or traced to a particular function or market segment such as a territory, customer, or product. In a territorial analysis, for example, each territory would be assigned the cost of salaries for those salespeople working exclusively in that territory.

Question 57

The traditional expense categories, such as salaries, rent, depreciation used in accounting statements are considered to be natural expenses.

Question 58

Computing the sales price less direct costs and variable costs is equal to the amount the sale contributes to profits refers to the contribution margin.

Question 59

With too much disaggregation of the sales data analysis, a sales manager will be inundated with sales information with which to make decisions.

Question 60

A sales invoice is the most important single source of sales information, but most companies utilize other sources as well, depending on the types of analysis desired.

Question 61

Sales organizations often incur high average selling costs because they over-utilize direct selling activities and underutilize their marketing support team.

Question 62

A territory-by-customer sales analysis will be less informative than merely a territory or customer sales analysis alone.

Question 63

The most illuminating kind of sales analysis disaggregates the sales information into multiple marketing units or cross classifications.

Question 64

It is often difficult to decide how to allocate resources, because the precise impact of expenditures on different elements of the marketing mix-like advertising, sales promotion materials, sales calls, and post-purchase service-isn't readily measurable.

Question 65

Sales managers should utilize all their resources to achieve that balance between sales volume and costs that will result in the highest long-run costs.

Question 66

Marketers tend to see costs as an end, something to be reduced, whereas accountants see costs largely as a means to an end or benefit-usually sales.

Question 67

Based on experience and research, standard costs are predetermined costs that include labor, material, factory overhead and machinery resources needed to produce a certain output can be predicted and standardized as norms in conducting costs analyses.

Question 68

In conventional accounting practice, most marketing expenses are charged off in the period incurred, while production costs are identified with per unit output held in inventory until sold.

Question 69

In the past, the inability to collect and analyze the huge volume of marketing data has long hindered the progress of marketing costs analysis, but today with more sophisticated collection and analysis software, the mass of marketing data has become increasingly manageable.

Question 70

Sales analysis may be described as the collection, classification, and evaluation of an organization's sales figures

Question 71

An audit of the sales management functions includes an assessment of recruitment, training, compensation, supervision, forecasting, evaluation, quotas, sales, costs, and profitability analyses.

Question 72

An audit of the sales force organization planning system entails the evaluation of the external environmental factors (economic, sociocultural, competitive, technological, and political-legal) and the intra-organizational factors (company structure, sales-marketing department linkages, marketing mix).

Question 73

An audit of the sales force organization environment includes an assessment of the sales department's goals and objectives, its overall sales management program, and the program's deployment.

Question 74

An audit of sales managerial traits includes an assessment of the adequacy of leadership, motivation, and communication skills as well as in empowering salespeople and seeking their participation in decision making.