People Points is a marketing research firm that organises focus groups for consumer product companies. Each focus
Question:
People Points is a marketing research firm that organises focus groups for consumer product companies. Each focus group has eight individuals who are paid $60 per session to provide comments on new products. These focus groups meet in hotels and are led by a trained, independent marketing specialist hired by People Points. Each specialist is paid a fixed fee to conduct a minimum number of sessions and a per-session fee of $2200. A People Points staff member attends each session to ensure that all the logistical aspects run smoothly.
Cost item D or I V or F
A Payment to individuals in each focus group to provide comments on new products
B Annual subscription of People Points to Consumer Reports magazine
C Telephone calls made by People Points staff member to confirm that individuals will attend a focus group session (records of individual calls are not kept)
D Meals provided to participants in each focus group
E Lease payment by People Points for coprate office
F Cost of tapes used to record comments made by individuals in a focus group session (these tapes are sent to the company whose products are being tested)
G Fuel costs of People Points staff for company-owned vehicles (staff members submit monthly bills)
H Fee paid to focus group leader to conduct 20 focus groups per year on new products
Classify each of the following cost items (A-H) as: a. direct or indirect (D or I) costs with respect to each individual focus group (4 marks)
b. variable or fixed (V or F) costs (4 marks)