A Coffee Chain Could Not Understand Why Its New Commercial

question 96

Multiple Choice

A coffee chain could not understand why its new commercial was not successful at improving sales. The commercial,which showed its latte followed by a jingle,had aired for a month on popular television stations. This commercial was not successful because:

• A) television advertising is not an effective medium for promoting coffee.
• B) jingles are not effective at creating conditioned responses to brands.
• C) the commercial should have played the jingle before showing the latte.
• D) because the television commercial was shown for a month, any product associations between the jingle and the latte became extinct.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, improving accuracy in product costing.

Overhead Cost

Expenses related to the day-to-day running of a business that are not directly linked to a specific product or service but are necessary for the business to operate.

Activity Rates

The specific costs associated with particular business activities, measured to allocate resources or assess performance.

Direct-Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process.