In Order to Have Some of Its Cereals Highlighted in a Mailing

question 170

Multiple Choice

In order to have some of its cereals highlighted in a mailing sent out by Safeway, General Mills has agreed to pay a portion of their costs associated with the advertising mailer. General Mills' payment is designed to

• A) facilitate reseller support.
• B) encourage product trial.
• C) retain loyal customers.
• D) identify prospects.
• E) reduce sales fluctuations.

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Definitions:

Variable Cost

Costs that vary in direct proportion to changes in the level of production or sales activity.

Fixed Costs

Costs that do not fluctuate with the level of production or sales activity, such as rent, salaries, and insurance premiums, remaining constant regardless of business volume.

Break-Even

The point at which total revenues equal total costs, leading to neither a profit nor a loss.

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, used to cover fixed costs and to generate profit.