The "Contribution-Margin Approach" to Marketing Cost Analysis

question 74

Multiple Choice

The "contribution-margin approach" to marketing cost analysis:

• A) considers only those costs which are directly related to particular alternatives.
• B) is especially useful for estimating the long-run profit of a proposed strategy.
• C) allocates variable costs which are hard to measure to overhead.
• D) is especially useful for determining if there should be more controls on fixed costs.
• E) All of these are correct.

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Definitions:

Beta

An indicator of the degree of variability or systematic risk associated with a security or portfolio relative to the broader market.

Treynor Measure

A performance metric that measures the returns earned in excess of that which could have been earned on a riskless investment per each unit of market risk.

Standard Deviation

A measure of the dispersion or variability in a set of values, used to assess the risk associated with a particular security or investment portfolio.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates the stock is more volatile than the market, while a beta below 1 indicates the stock is less volatile.