A Company Produces Three Product Lines and a Different Marketing

question 93

Multiple Choice

A company produces three product lines and a different marketing manager is responsible for each line. Most marketing expenses are specific to each line, but a common sales force sells all three lines. Sales reps are paid by commission, with a different commission for each product line. In this case, in a marketing cost analysis,

• A) the contribution-margin approach would probably divide personal selling expense based on commission expense for each product line.
• B) a full-cost approach would ignore commission expense since it is not a fixed cost.
• C) sales commissions are a variable expense and would not be considered in the contribution-margin approach.
• D) the full-cost approach would be easier to do if all sales reps were paid a straight salary.
• E) None of these is true.

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Definitions:

Immigrant Household

A household in which the primary members have relocated from another country.

Native-born Workers

Refers to individuals born in the country in which they are working, as opposed to foreign-born workers or immigrants.

Immigration

The movement of people into a country in order to live or work there, which is often permanent or long-term.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers.