Scenario 6-5 Joe Rowan Walked into Pederson Toyota One Day and Began

question 46

Multiple Choice

Scenario 6-5
Joe Rowan walked into Pederson Toyota one day and began looking at price stickers on Toyota Camrys. He was interested in that model because he had seen a number of television and magazine ads describing the car's features and reputation for reliability. After closely examining the stickers, Joe noticed a line that said "Dealer Promotion Allowance - $125.00." Joe asked a salesperson what that meant. The reply was that it was a charge that helped the dealership pay for local advertising to encourage consumers to shop at that particular dealer. After further discussion, Joe learned that almost 5% of the cost of the vehicle comes from expense for national and local advertising.
-(Scenario 6-5) After the comments in the above question were made, the salesperson replied, "If our industry didn't do so much advertising you probably couldn't afford to buy that computer to do your own research." Which of the following pros of advertising is the salesperson likely using to support his comment?

• A) advertising fosters a diverse and affordable mass media
• B) advertising is very artistic in its nature
• C) advertising reflects the priorities of a society
• D) advertising fosters more rapid new product success, thus lowering the cost

Learn how to calculate selling prices based on manufacturing cost markups.

Master the application of overhead using departmental predetermined overhead rates with machine-hours as the allocation base.

Gain insights into the relationship between manufacturing overhead and selling prices.

Comprehend the determination of overhead applied in various production departments.