Question 1

A firm's breakeven volume will increase if:

Accepted Answer

A)  fixed costs increase. 
B)  contribution margin increases. 
C)  variable costs decrease. 
D)  selling price increases. 
A)  fixed costs increase. 
B)  contribution margin increases. 
C)  variable costs decrease. 
D)  selling price increases.

Question 2

Businesses that use cost-based pricing always apply the same markup percentage across all products.

Accepted Answer

A) True 
 B)False

Question 3

Jamara has started a home party business that hosts parties and those attending paint signs. Jamara must pay $500 a year to be a representative for Paint A Sign. In addition, Jamara buys all the materials for the parties, including the metal base, the paints, brushes, stencils and transfers. These items all add up to $10 on average. Jamara charges each participant $25 for each sign they make. Considering only these costs, Jamara's Paint A Sign business breakeven volume is:

Accepted Answer

A)  33.3 participants a year. 
B)  50 participants a year. 
C)  20 participants a year. 
D)  14.29 participants a year. 
A)  33.3 participants a year. 
B)  50 participants a year. 
C)  20 participants a year. 
D)  14.29 participants a year.

Question 4

MycroFiber is a producer of microfiber material for the auto detailing industry. Jamal, the owner of MycroFiber is highly skilled in the technical and manufacturing areas, but does not understand pricing. Jamal knows he wants to cover the cost of production when selling his material and needs revenue to cover his overhead costs and to make a profit. To be sure he meets these goals, Jamal decides to take a cost-based pricing approach and use a 50% markup percentage. If MycroFiber's cost of production is $4 a square yard, Jamal will price his material at:

Accepted Answer

A)  $6 a square yard. 
B)  $2 a square yard. 
C)  $4 a square yard. 
D)  $8 a square yard. 
A)  $6 a square yard. 
B)  $2 a square yard. 
C)  $4 a square yard. 
D)  $8 a square yard.

Question 5

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. For pricing decisions, Maddie should consider her $1,000 rent as a:

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  semi-variable cost. 
D)  loss. 
A)  fixed cost. 
B)  variable cost. 
C)  semi-variable cost. 
D)  loss.

Question 6

Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers.

Accepted Answer

A) True 
 B)False

Question 7

​You would like to apply breakeven analysis to know when your startup tutoring venture will turn a profit. Which of the following considerations must you take into account?

Accepted Answer

A)  ​The hourly wage you pay your tutors. 
B)  ​The rent you pay your office landlord. 
C)  ​The hourly price you intend to charge for tutoring. 
D)  ​The demand for tutoring services in your market. 
E)  ​All of the above must be considered. 
A)  ​The hourly wage you pay your tutors. 
B)  ​The rent you pay your office landlord. 
C)  ​The hourly price you intend to charge for tutoring. 
D)  ​The demand for tutoring services in your market. 
E)  ​All of the above must be considered.

Question 8

Parker Industries is a small company with a big name! Parker Industries is actually a one-person company that imports strands of LED lights from China and sells them through its website. Parker's only overhead is a storage unit for inventory that costs $125 a month and a $25 monthly fee for website hosting. Currently, Parker imports the lights for $.99 each (including inbound shipping) and sells them for $4.49. Parker also pays shipping expenses of $.50 per light strand. What is Parker's monthly fixed costs?

Accepted Answer

A)  $150 
B)  $125 
C)  $.99 
D)  $1.49 
A)  $150 
B)  $125 
C)  $.99 
D)  $1.49

Question 9

Brands which can differentiate themselves from competitors by features, quality, or service are able to:

Accepted Answer

A)  charge a higher price than competitors. 
B)  reduce fixed costs. 
C)  reduce variable costs. 
D)  increase the breakeven volume. 
A)  charge a higher price than competitors. 
B)  reduce fixed costs. 
C)  reduce variable costs. 
D)  increase the breakeven volume.

Question 10

Jamara has started a home party business that hosts parties and those attending paint signs. Jamara must pay $500 a year to be a representative for Paint A Sign. In addition, Jamara buys all the materials for the parties, including the metal base, the paints, brushes, stencils, and transfers. These items all add up to $10 on average. Jamara charges each participant $25 for each sign they make. For Jamara's Paint A Sign business, the gross margin or contribution margin for Jamara's business is:

Accepted Answer

A)  $15. 
B)  $20. 
C)  $10. 
D)  $25. 
A)  $15. 
B)  $20. 
C)  $10. 
D)  $25.

Question 11

Define price. Explain why setting prices can be a difficult process.

Accepted Answer

Price refers to the amount of funds requ

Question 12

Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery leases for $70,000 annually and can produce 10,000 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. Currently, sales are 2,500,000 annually. What is the profit on the gloves if the machinery lease is the only fixed cost considered?

Accepted Answer

A)  $105,000 
B)  $250,000 
C)  $75,000 
D)  $175,000 
A)  $105,000 
B)  $250,000 
C)  $75,000 
D)  $175,000

Question 13

Breakeven analysis is an effective tool to determine the level of sales required to cover costs.

Accepted Answer

A) True 
 B)False

Question 14

Javier is the business manager at his college. In his role, Javier makes a lot of business decisions. Javier has installed a vending machine in a dorm for soft drinks. The machine rents for $200 a month and the electrical use is minimal. Javier buys soft drinks for $.25 each and charges $.75 each from the vending machine. Currently, the machine has a sales volume of 400 cans a month. Javier thinks raising the price to $.80 will not have any effect on sales. What impact would raising the price to $.80 have on overall profit or loss?

Accepted Answer

A)  Profit of $20 
B)  Profit of $320 
C)  Profit of $100 
D)  Profit of $200 
A)  Profit of $20 
B)  Profit of $320 
C)  Profit of $100 
D)  Profit of $200

Question 15

A firm has $50,000 in fixed costs, a selling price of $25 per unit, and variable costs of $5 a unit. If the fixed costs increase to $60,000:

Accepted Answer

A)  Breakeven volume will increase. 
B)  Breakeven volume will decrease. 
C)  Profits will be increased. 
D)  Selling price will be decreased. 
A)  Breakeven volume will increase. 
B)  Breakeven volume will decrease. 
C)  Profits will be increased. 
D)  Selling price will be decreased.

Question 16

Jamara has started a home party business that hosts parties and those attending paint signs. Jamara must pay $500 a year to be a representative for Paint A Sign. In addition, Jamara buys all the materials for the parties, including the metal base, the paints, brushes, stencils, and transfers. Currently, these items all add up to $10 on average. Jamara charges each participant $25 for each sign they make. For Jamara's Paint A Sign business, the $500 is a fixed cost per year. Which of the following is true?

Accepted Answer

A)  Jamara will pay the Paint A Sign company $500 regardless of the number of parties she hosts. 
B)  Jamara will have to pay Paint A Sign $500 for every party she hosts. 
C)  Jamara will lose money if she has less than 100 participants a year. 
D)  Jamara's annual fixed costs will be higher than her variable costs regardless of the number of participants. 
A)  Jamara will pay the Paint A Sign company $500 regardless of the number of parties she hosts. 
B)  Jamara will have to pay Paint A Sign $500 for every party she hosts. 
C)  Jamara will lose money if she has less than 100 participants a year. 
D)  Jamara's annual fixed costs will be higher than her variable costs regardless of the number of participants.

Question 17

A firm that uses the product cost plus a target markup percentage to calculate the sales price is using:

Accepted Answer

A)  cost-based pricing. 
B)  expense pricing. 
C)  discount pricing. 
D)  fixed expense pricing. 
A)  cost-based pricing. 
B)  expense pricing. 
C)  discount pricing. 
D)  fixed expense pricing.

Question 18

Pricing is a highly visible component of a firm's marketing mix and an easy tool for obtaining a differential advantage over competitors. However, when competitors continually undercut each other to gain that advantage, it can lead to a price war that damages all companies involved. When firms have identical or very similar products and price information is readily available - for example, Coca-Cola and Pepsi - a common pricing approach to avoid price wars is:

Accepted Answer

A)  competitive-parity pricing. 
B)  market-based pricing. 
C)  commodity pricing. 
D)  bargain pricing. 
A)  competitive-parity pricing. 
B)  market-based pricing. 
C)  commodity pricing. 
D)  bargain pricing.

Question 19

The bookstore on your university campus uses a pricing approach where all items are marked up 50%. For a new shipment of new school hoodies, the items wholesale price is $40, so the selling price is $60. What is the contribution margin for the hoodies?

Accepted Answer

A)  $20 
B)  $40 
C)  50% 
D)  $100 
A)  $20 
B)  $40 
C)  50% 
D)  $100

Question 20

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

Accepted Answer

A) True 
 B)False

A firm's breakeven volume will increase if:

Businesses that use cost-based pricing always apply the same markup percentage across all products.

Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers.

You would like to apply breakeven analysis to know when your startup tutoring venture will turn a profit. Which of the following considerations must you take into account?

Brands which can differentiate themselves from competitors by features, quality, or service are able to:

Define price. Explain why setting prices can be a difficult process.

Breakeven analysis is an effective tool to determine the level of sales required to cover costs.

A firm has $50,000 in fixed costs, a selling price of $25 per unit, and variable costs of $5 a unit. If the fixed costs increase to $60,000:

A firm that uses the product cost plus a target markup percentage to calculate the sales price is using:

The bookstore on your university campus uses a pricing approach where all items are marked up 50%. For a new shipment of new school hoodies, the items wholesale price is $40, so the selling price is $60. What is the contribution margin for the hoodies?

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

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

A firm's breakeven volume will increase if:

Businesses that use cost-based pricing always apply the same markup percentage across all products.

Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers.

​You would like to apply breakeven analysis to know when your startup tutoring venture will turn a profit. Which of the following considerations must you take into account?

Brands which can differentiate themselves from competitors by features, quality, or service are able to:

Define price. Explain why setting prices can be a difficult process.

Breakeven analysis is an effective tool to determine the level of sales required to cover costs.

A firm has $50,000 in fixed costs, a selling price of $25 per unit, and variable costs of $5 a unit. If the fixed costs increase to $60,000:

A firm that uses the product cost plus a target markup percentage to calculate the sales price is using:

The bookstore on your university campus uses a pricing approach where all items are marked up 50%. For a new shipment of new school hoodies, the items wholesale price is $40, so the selling price is $60. What is the contribution margin for the hoodies?

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

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

You would like to apply breakeven analysis to know when your startup tutoring venture will turn a profit. Which of the following considerations must you take into account?