Which of the Following Statements Is True of the Cost

question 85

Multiple Choice

Which of the following statements is true of the cost per thousand (CPM) method of measuring efficiency in the advertising industry?

• A)It refers to the dollar cost of reaching 1,000 prospects.
• B)Its chief disadvantage relates to its complexity.
• C)It does not allow for a common base of comparison between differing media types.
• D)It strongly discounts the positive effects theory.

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much of sales revenue is available to cover fixed costs and generate profit.

Target Profit

The desired level of financial gain set by a business for a specific period, guiding pricing strategies and operational decisions.

Monthly Fixed Expense

Expenses that do not change month to month, regardless of business activity, such as rent or salaries.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, represented as a percentage.