MO Marketing Officer Budget & Financial Management 2 — Questions and Answers
Question 1: A marketing officer calculates the average revenue generated by a customer over their entire relationship with the company. What metric is this?
- Customer acquisition cost
- Net promoter score
- Customer lifetime value (Correct answer)
- Market share index
Correct answer: Customer lifetime value
Customer lifetime value (CLV) measures the total revenue a business can expect from a single customer account over the duration of their relationship.
Question 2: If a company spends $100,000 to acquire 500 new customers, what is the Customer Acquisition Cost (CAC)?
- $50
- $100
- $200 (Correct answer)
- $500
Correct answer: $200
CAC = Total acquisition spend / Number of new customers = $100,000 / 500 = $200.
Question 3: Which financial ratio compares customer lifetime value to customer acquisition cost to evaluate marketing efficiency?
- CLV:CAC ratio (Correct answer)
- Revenue per employee
- Gross margin percentage
- Cost-per-click ratio
Correct answer: CLV:CAC ratio
The CLV:CAC ratio indicates whether the long-term revenue from a customer justifies the cost to acquire them; a ratio of 3:1 or higher is generally healthy.
Question 4: A marketing officer is evaluating whether to invest in a new marketing technology platform. Which financial analysis method calculates the time it takes to recover the initial investment?
- Net present value analysis
- Payback period analysis (Correct answer)
- Internal rate of return
- Break-even analysis
Correct answer: Payback period analysis
Payback period analysis determines how long it will take for returns from an investment to equal its initial cost.
Question 5: A campaign costs $20,000 and the product has a contribution margin of $40 per unit. How many units must be sold to break even on the campaign?
- 200 units
- 400 units
- 500 units (Correct answer)
- 800 units
Correct answer: 500 units
Break-even units = Fixed campaign cost / Contribution margin per unit = $20,000 / $40 = 500 units.
Question 6: Which budget control practice involves reviewing and adjusting forecasts on a continuous rolling 12-month basis?
- Zero-based budgeting
- Rolling forecast budgeting (Correct answer)
- Incremental budgeting
- Activity-based budgeting
Correct answer: Rolling forecast budgeting
Rolling forecast budgeting continuously updates projections for the next 12 months as each period ends, keeping plans current.
Question 7: A marketing officer notices that 20% of campaigns are generating 80% of revenue. This observation reflects which principle?
- Central limit theorem
- Pareto principle (Correct answer)
- Law of diminishing returns
- Normal distribution principle
Correct answer: Pareto principle
The Pareto principle (80/20 rule) states that roughly 80% of effects come from 20% of causes, guiding budget reallocation toward the highest-performing activities.
MO Marketing Officer Budget & Financial Management 2
A marketing officer calculates the average revenue generated by a customer over their entire relationship with the company.
What metric is this?