In 1990, a 30-Second Ad During the Super Bowl Cost

question 328

Multiple Choice

In 1990, a 30-second ad during the Super Bowl cost $700,000. By 2015, the cost had soared to $4.5 million for a 30-second spot. The most likely reason for the escalating cost is that

• A)the number of TV viewers of the Super Bowl has grown substantially.
• B)the ads are much more elaborate and therefore more expensive to produce.
• C)the NFL knows advertisers will pay anything it wants.
• D)the ad agencies have dramatically increased their creative and production fees.
• E)the companies that create Super Bowl ads do not have to run any other ads all year.

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Definitions:

Indirect Labor Cost

Wages and related expenses for workers who assist in or facilitate the production process but do not directly work on the product.

Direct Materials Cost

The expenditure on raw materials that are directly traceable to the production of a specific product.

Direct Labor Cost

Expenses associated with employees who directly contribute to the production of goods, such as wages for assembly-line workers.

Cost of Goods Manufactured

The sum of all expenses associated with the creation of finished goods within a given time frame, encompassing wages, raw materials, and indirect costs.