The Purpose of Profitability Control Is to ________

question 93

Multiple Choice

The purpose of profitability control is to ________.

• A) examine whether the planned results are being achieved
• B) examine where the company is making and losing money
• C) evaluate and improve the spending efficiency and impact of marketing expenditures
• D) examine whether the company is pursuing its best opportunities with respect to markets, products, and channels
• E) understand the efficiency of the sales force, advertising, sales promotion, and distribution

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Definitions:

Standard Amount

A benchmark or norm set for the quantity or cost of inputs in producing a specific product or in carrying out a process.

Actual Output

The real, quantifiable production achieved within a given time period, often compared against planned or potential output.

Labor Efficiency Variance

The difference between the actual labor hours worked and the expected labor hours, multiplied by the standard labor rate, indicating efficiency in labor use.

Labor Rate Variance

A metric that calculates the difference between the actual and expected cost of labor.