Propose that you work for Taco Bell and you advertise during American Idol. Their rating is 19. This is equal to 21.3 million TV's. American Idol charges $700,000 for a 30second ad. If a meal contribution at Taco Bell is
$0)60, how many purchases are required to break even for the ad costs?

Question

Propose that you work for Taco Bell and you advertise during American Idol. Their rating is 19. This is equal to 21.3 million TV's. American Idol charges $700,000 for a 30­second ad. If a meal contribution at Taco Bell is
$0)60, how many purchases are required to break even for the ad costs?

Quizplus · Accepted Answer

First, we need to calculate the total cost of the ad:

$700,000 for a 30-second ad

We can assume that Taco Bell will air a 30-second ad, so the cost is $700,000.

Now, we need to calculate how many purchases are required to break even:

Cost of the ad ÷ Contribution per meal

$700,000 ÷ $0.60 = 1,166,667

So, we need 1,166,667 purchases to break even on the cost of the ad.

However, we need to remember that American Idol has a rating of 19, which is equal to 21.3 million TV's. So, we need to adjust our calculation:

(21.3 million ÷ 1,000,000) x 1,166,667 = 24,799,995

This means we need almost 25 million purchases to break even on the cost of the ad during American Idol.

The closest answer choice is D: 1,116,667, which is the number of purchases needed without adjusting for the rating of American Idol. So, the best choice is D.

Propose That You Work for Taco Bell and You Advertise