IHI 81


Sales Management and Practices:

Question 1:
It is most advisable for a sales manager to schedule an audit:
A. only after some major problem has emerged.
B. when competition becomes fierce.
C. at least quarterly.
D. at least annually.

Question 2:
__________ provide basic demographic data on customers, location of purchases, prices paid, reasons for purchases, and service expected.
A. Warranty cards
B. Consumer diaries
C. Salesperson’s call reports
D. Sales invoices

Question 3:
It is important that all sales managers understand the “iceberg principle” because it states that:
A. analogous to the invisible 90 percent of floating icebergs which can sink mighty ships (like the Titanic), favorable total sales figures can hide unprofitable market segments and unproductive sales activities.
B. large numbers of the sales force are not very productive compared to what they could be since their sales managers are cold, aloof, and insensitive to their individual needs, i.e., they act much like a floating iceberg.
C. like a floating iceberg, some salespeople will initially rise above the others due to their self-promotion efforts and flamboyance, yet it is the hardworking average salesperson who makes up the vast ocean of successful salespeople.
D. many salespeople merely float near the surface, somewhat like icebergs, without ever attempting any in-depth penetration of their markets to obtain larger sales.

Question 4:
Relative to the analysis of sales volume, costs, and profits, traditional income statements can be considered as:
A. extremely beneficial.
B. direct and to the point.
C. limited value because they fail to reveal the costs of performing different marketing activities.
D. the basic tool of analysis.

Question 5:
Marketing cost analysis:
A. studies total sales volume first.
B. adds sales revenue to various market segments or organizational units.
C. investigates the costs incurred and profits generated from sales volume.
D. is performed entirely by the headquarters marketing team.

Question 6:
For a particular product line, sales during the past year were about $15,000,000, cost of goods sold were $10,000,000, sales expenses were $1,200,000, and fixed costs were $2,000,000. What was the product line’s contribution margin for the year?
A. $13,800,000
B. $3,800,000
C. $5,000,000
D. $3,000,000

Question 7:
With regard to the full costs versus contribution margin controversy, which of the statements below is INCORRECT?
A. Under the full costs (or net profit) approach, all cost must be assigned in order to determine actual profit.
B. The contribution margin approach claims that only costs that are controllable and traceable to a particular segment should be subtracted from the revenue produced by that segment.
C. In marketing costs analysis, the trend in marketing profitability factors the full-cost approach.
D. With the contribution margin approach, costs are classified as either variable or fixed, then all the variable costs are deducted from sales to determine a given segment’s contribution margin.

Question 8:
Which of the following approaches considers the interrelationships among marketing activities and the synergism of their efforts?
A. The marketing costs approach
B. The input-output efficiency approach
C. The full-cost approach
D. The contribution margin approach

Question 9:
Compute the Return on Assets Managed (ROAM) for each segment of the business using the following data:
Accounts Receivable = $3,000,000
Inventory = $7,000,000
Contribution Margin = $2,000,000
Sales = $5,000,000
A. 0.2
B. 0.3
C. 0.4
D. 0.5

Question 10:
ROAM is:
A. interchangeable with ROI.
B. the product of the profit margin on sales.
C. the result of the profit margin on sales minus inventory turnover.
D. equal to sales/net profit times total assets used/sales.

Question 11:
To increase the return on assets managed for specific segments, the sales manager can:
A. raise the profit margin on sales.
B. increase total sales while decreasing profit margins.
C. increase the relative dollar value of assets necessary to achieve sales.
D. conduct sales audits by segments to identify those that are yielding inadequate contribution margins.