Which of the Following Statements About the Relationship of Advertising

question 6

Multiple Choice

Which of the following statements about the relationship of advertising to sales and profits is true?

• A) Sales will remain constant even if there is additional advertising.
• B) Some sales will occur even if there is no advertising.
• C) The durability of advertising is long, so a one-time investment is sufficient.
• D) In consumer goods marketing, the marketing budget is a prime indicator of profitability.
• E) There is no saturation level for advertising.

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Definitions:

Customer Cost Analysis

The process of analyzing the costs involved in serving a customer, including acquisition, service, and support costs, to determine profitability.

Activity-Based Costing

An expense determination technique that identifies organizational activities and attributes the cost of each to all products and services, commensurate with their genuine consumption.

Direct Materials Cost

The cost of raw materials and components that are directly involved in the production of a product, easily traceable to the end product.

Direct Labor Cost

The wages and other expenses for labor directly involved in the manufacture of specific goods or services.