Question 1

At the breakeven sales volume:

Accepted Answer

A)  Profits are zero. 
B)  Losses are equal to fixed costs. 
C)  Profits are equal to variable costs. 
D)  Losses are equal to variable cost times units sold. 
A)  Profits are zero. 
B)  Losses are equal to fixed costs. 
C)  Profits are equal to variable costs. 
D)  Losses are equal to variable cost times units sold.

Question 2

Javier is the business manager of his college. In his role, Javier makes a lot of business decisions. Javier is currently considering installing a vending machine in one of the dorms for soft drinks. The machine rents for $200 a month and the electrical use is minimal. Javier can buy soft drinks for $.25 each and plans on charging $.75 each from the vending machine. What is the contribution margin on the soft drinks?

Accepted Answer

A)  $.50 
B)  $.25 
C)  $.75 
D)  $1.00 
A)  $.50 
B)  $.25 
C)  $.75 
D)  $1.00

Question 3

A cost that changes with the level of production is called a(n) _____ cost.

Accepted Answer

A)  variable 
B)  fixed 
C)  average total 
D)  marginal 
A)  variable 
B)  fixed 
C)  average total 
D)  marginal

Question 4

When Josh stopped at the convenience store for a drink, he noticed that in both the cooler and the fountain drinks the prices of all the soft drinks were identical. You could choose Coke, Pepsi, Dr. Pepper, Mountain Dew, or many others, but they were all the same price. This is an example of:

Accepted Answer

A)  competitive parity pricing. 
B)  discount pricing. 
C)  prestige pricing. 
D)  market share pricing. 
A)  competitive parity pricing. 
B)  discount pricing. 
C)  prestige pricing. 
D)  market share pricing.

Question 5

The Acme Flashlight Company breaks even at 20,000 flashlights at $6 each, with the average variable cost per flashlight of $4. The amount of its fixed costs is:

Accepted Answer

A)  $20,000 
B)  $40,000 
C)  $60,000 
D)  $80,000 
A)  $20,000 
B)  $40,000 
C)  $60,000 
D)  $80,000

Question 6

Breakeven calculations insure that fixed costs are covered, but do not consider variable costs.

Accepted Answer

A) True 
 B)False

Question 7

Many firms attempt to promote stable prices by meeting competitors' prices to maintain pricing parity.

Accepted Answer

A) True 
 B)False

Question 8

It is interesting that gasoline stations near one another normally have the very same price - down to the tenth of a cent a gallon! From a strategic pricing perspective, we can conclude gasoline stations tend to use a:

Accepted Answer

A)  competition objective. 
B)  sales volume objective. 
C)  prestige objective. 
D)  loss avoidance objective. 
A)  competition objective. 
B)  sales volume objective. 
C)  prestige objective. 
D)  loss avoidance objective.

Question 9

Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery costs $70,000 and can produce 40,000 pairs of gloves each day. The raw latex material for each pair of gloves costs $.03 and Vandelay sells the gloves at a wholesale price of $.10 a pair. Vandelay's contribution margin for a pair of gloves is:

Accepted Answer

A)  $.07. 
B)  $.13. 
C)  $.10. 
D)  $.40. 
A)  $.07. 
B)  $.13. 
C)  $.10. 
D)  $.40.

Question 10

A value pricing strategy emphasizes the benefits a product provides in comparion to the price and quality levels of competing offerings.

Accepted Answer

A) True 
 B)False

Question 11

Maddie noticed that many students on campus had t-shirts and sweatshirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t-shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t-shirts for $6 each and sweatshirts for $10 each. Maddie calculated the cost of materials for the silk screening at $2 per unit. If Maddie sells a screened t-shirt for $15 and a sweatshirt for $25 each, which would she prefer the customer purchase?

Accepted Answer

A)  Sweatshirt because the contribution margin is higher 
B)  T-shirt because the cost of production is lower 
C)  Sweatshirt because the selling price is higher 
D)  T-shirt because the contribution margin is higher 
A)  Sweatshirt because the contribution margin is higher 
B)  T-shirt because the cost of production is lower 
C)  Sweatshirt because the selling price is higher 
D)  T-shirt because the contribution margin is higher

Question 12

Maddie noticed that many students on campus had t-shirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t-shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t-shirts for $6 each and determined the cost of materials for the silk screening at $2.50 per unit. Considering just the figures provided above, how many t-shirts does she need to sell each month to breakeven if she prices the screened t-shirts at $15?

Accepted Answer

A)  200 
B)  400 
C)  225 
D)  153 
A)  200 
B)  400 
C)  225 
D)  153

Question 13

The price of products only includes the costs incurred by the manufacturer for procuring the raw material and for processing the products.

Accepted Answer

A) True 
 B)False

Question 14

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit is currently operating at breakeven volume. This firm has:

Accepted Answer

A)  profits of zero. 
B)  losses equal to fixed costs. 
C)  sales of 5,000 units. 
D)  profits of $50,000. 
A)  profits of zero. 
B)  losses equal to fixed costs. 
C)  sales of 5,000 units. 
D)  profits of $50,000.

Question 15

Explain the concept of value pricing.

Accepted Answer

Value pricing is a pricing strategy that

Question 16

Breakeven sales volume is calculated as:

Accepted Answer

A)  Breakeven point (in units) = Total Fixed Costs/Contribution Margin 
B)  Breakeven point (in units) = Total Variable Costs/Contribution Margin 
C)  Breakeven point (in units) = Total Costs/Contribution Margin 
D)  Breakeven point (in units) = Total Costs/Selling Price 
A)  Breakeven point (in units) = Total Fixed Costs/Contribution Margin 
B)  Breakeven point (in units) = Total Variable Costs/Contribution Margin 
C)  Breakeven point (in units) = Total Costs/Contribution Margin 
D)  Breakeven point (in units) = Total Costs/Selling Price

Question 17

Which of the following is NOT one of the three foundations of pricing?

Accepted Answer

A)  Production efficiency 
B)  Costs 
C)  Potential demand 
D)  Competition 
A)  Production efficiency 
B)  Costs 
C)  Potential demand 
D)  Competition

Question 18

Firms with a volume or sales objective are most likely to:

Accepted Answer

A)  reduce prices to maximize sales or gain a specific market share. 
B)  charge a higher price than most competitors to increase revenue. 
C)  raise prices to maintain prestige. 
D)  match competitors' prices. 
A)  reduce prices to maximize sales or gain a specific market share. 
B)  charge a higher price than most competitors to increase revenue. 
C)  raise prices to maintain prestige. 
D)  match competitors' prices.

Question 19

A firm can reduce its breakeven volume by:

Accepted Answer

A)  increasing contribution margin. 
B)  decreasing contribution margin. 
C)  decreasing variable costs. 
D)  lowering selling price. 
A)  increasing contribution margin. 
B)  decreasing contribution margin. 
C)  decreasing variable costs. 
D)  lowering selling price.

Question 20

Vandelay Industries manufactures a range of latex products. To set the price of its products, George, the CEO of Vandelay, calculates the total cost associated with the manufacturing of each product, then multiples that by 1.5 to get the sales price. Therefore, a product that cost $10 for Vandelay to manufacture would sell for $15. Vandelay's margin on the sale is:

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $20.

At the breakeven sales volume:

A cost that changes with the level of production is called a(n) _____ cost.

When Josh stopped at the convenience store for a drink, he noticed that in both the cooler and the fountain drinks the prices of all the soft drinks were identical. You could choose Coke, Pepsi, Dr. Pepper, Mountain Dew, or many others, but they were all the same price. This is an example of:

The Acme Flashlight Company breaks even at 20,000 flashlights at $6 each, with the average variable cost per flashlight of $4. The amount of its fixed costs is:

Breakeven calculations insure that fixed costs are covered, but do not consider variable costs.

Many firms attempt to promote stable prices by meeting competitors' prices to maintain pricing parity.

It is interesting that gasoline stations near one another normally have the very same price - down to the tenth of a cent a gallon! From a strategic pricing perspective, we can conclude gasoline stations tend to use a:

A value pricing strategy emphasizes the benefits a product provides in comparion to the price and quality levels of competing offerings.

The price of products only includes the costs incurred by the manufacturer for procuring the raw material and for processing the products.

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit is currently operating at breakeven volume. This firm has:

Explain the concept of value pricing.

Breakeven sales volume is calculated as:

Which of the following is NOT one of the three foundations of pricing?

Firms with a volume or sales objective are most likely to:

A firm can reduce its breakeven volume by:

Marketing: the Art of Satisfying Customers

Strategic Planning in Contemporary Marketing

The Marketing Environment, Ethics, and Social Responsibility

E-Business: Managing the Customer Experience

Social Media: Living in the Connected World

Consumer Behavior

Business Markets and Buying Behavior

Global Marketing

Market Segmentation, Targeting, and Positioning

Marketing Research

Product and Branding Concepts

Developing and Managing Products

Pricing Strategies

Distribution Channels and Supply Chain Management

Retailing and Direct Marketing

Integrated Marketing Communications

Personal Selling and Sales Promotion

Creating A Marketing Plan

Financial Analysis In Marketing

Your Career In Marketing

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Exam 13: Pricing Concepts

At the breakeven sales volume:

A cost that changes with the level of production is called a(n) _____ cost.

When Josh stopped at the convenience store for a drink, he noticed that in both the cooler and the fountain drinks the prices of all the soft drinks were identical. You could choose Coke, Pepsi, Dr. Pepper, Mountain Dew, or many others, but they were all the same price. This is an example of:

The Acme Flashlight Company breaks even at 20,000 flashlights at $6 each, with the average variable cost per flashlight of $4. The amount of its fixed costs is:

Breakeven calculations insure that fixed costs are covered, but do not consider variable costs.

Many firms attempt to promote stable prices by meeting competitors' prices to maintain pricing parity.

It is interesting that gasoline stations near one another normally have the very same price - down to the tenth of a cent a gallon! From a strategic pricing perspective, we can conclude gasoline stations tend to use a:

A value pricing strategy emphasizes the benefits a product provides in comparion to the price and quality levels of competing offerings.

The price of products only includes the costs incurred by the manufacturer for procuring the raw material and for processing the products.

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit is currently operating at breakeven volume. This firm has:

Explain the concept of value pricing.

Breakeven sales volume is calculated as:

Which of the following is NOT one of the three foundations of pricing?

Firms with a volume or sales objective are most likely to:

A firm can reduce its breakeven volume by:

Marketing: the Art of Satisfying Customers

Strategic Planning in Contemporary Marketing

The Marketing Environment, Ethics, and Social Responsibility

E-Business: Managing the Customer Experience

Social Media: Living in the Connected World

Consumer Behavior

Business Markets and Buying Behavior

Global Marketing

Market Segmentation, Targeting, and Positioning

Marketing Research

Product and Branding Concepts

Developing and Managing Products

Pricing Strategies

Distribution Channels and Supply Chain Management

Retailing and Direct Marketing

Integrated Marketing Communications

Personal Selling and Sales Promotion

Creating A Marketing Plan

Financial Analysis In Marketing

Your Career In Marketing

Filters