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Marketing Mid-Term Review

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Ryerson University
MKT 100
Chris Gibbs

Marketing ReviewMetric 1 expense typesClassification of Expensives One common classification is by variabilityThese include Variable Costs balloonstring bottom right paintmaterial top left Fixed Costs cash register bottom left One Time Fixed Costs Capital Costs real estatebuilding centreVariable cost Increase directly in proportion to the level of sales in dollars or units sold Change in proportion to the activity of a business Sometimes referred to as unitlevel costs since they vary with the number of units produced Can also be referred to as Cost of Goods Sold COGS Examples includeCost of goods sold COGSDirect labour costsSales commissionShipping chargesDelivery ChargesCost of direct materials or suppliesWages of temporary or parttime employeesBonuses Raw materialLabour Song Royalties Monthly Fixed cost Stay the same regardless of sales Fixed costs are sometimes referred to as Operating Overhead Expenses or Recurring Costs Examples includeMarketing related costsRentInsuranceEquipment expensesBusiness licensesSalary of permanent fulltime employeesFixed cost need for a company to runOne time fixed Similar to capital costs Capital costs are the fees associated with the initial setup of a plant or project after which there will only be recurring operational or running costs Capital costs are one time expenses Capital costs are fixed and are therefore independent of the level of output Payment may be spread out over many years in financial reports and tax returns Examples includeLandReal estateBuildingsConstructionPurchase of equipmentLeasehold improvementsrenovations CraneToolingImportants to marketers the distinction is crucial in forecasting the earning generated by various changes in units sales and thus the financial impact of proposed marketing campaigns fundamental to understanding prices and volume trade offsunderstand profitability
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