BUAD301 exam 3

A manufacturer sells a leather jacket for $249.95 to a retailer. Find the cost of a leather jacket if the markup is 90% based on cost.

$131.55

A sporting goods retail store owner limits sets the selling price of a sport item at $25. If the store owner feels a margin of 35% is needed to cover expenses and return a reasonable profit, what is the most the owner can pay the manufacturer for this item?

$16.25

A shirt is marked down 35% to a discounted price of $19.95. What is the regular selling price?

$30.69

The cost of a direct mail advertisement for Rolling Hills Restaurant was $5,000 and the reach for the direct mail was determined to be 10,000 homes. Families living in single family homes, a quarter of the homes reached by this campaign, were considered twice as important as families living in other kinds of homes. Which of the following is the correct weighted cost-per-thousand?

$800

Janet sells a product for $6.25. The variable costs are $3.75. Janet's break even units are 35,000. What is the amount of fixed costs?

$87,500

Best Buy purchases a laptop from Dell for $800. They intend to see the laptop to the end consumer at a margin of 20%. What would be the price to the end consumer?

$960 (20% of 800 is $160. $800 + $160 = $960

calculate price elasticity of demand for a restaurant's pizza under the following conditions: Old price: $8; old quantity: 1,000/month; total revenue: $8,000 New price: $10; New quantity; 900/month; total revenue: $9,000 a) what is the price elasticity of demand? b) if the new quantity sold per month were 700 (instead of 900), what would be the price elasticity of demand?

0.4; 1.2

A clothing company raised the price of one of its coats from $100 to $120. Now let's say that the increase caused a decrease in the quantity sold from 1,000 coats to 900 coats. Calculate the price elasticity of demand.

0.56

The demand curve suggests that an auto manufacturer will sell 20,000 Mercedes-Benz M-Class vehicles when they are priced at $50,800, but when the price is reduced to $45,000, that quantity will increase to 27,000 units. What is the resulting elasticity?

2.92

Alex (they/them) Freeman is the owner of a company that specializes in the manufacturing of office computers and printers. They recently received a large order from a company for 30 computers and 5 printers. In addition, the company tasked Alex with installing software into each of the computers. The cost per computer is $500 and the cost per printer is $100. The cost of installing the software to run on all the computers is $2,000. If Alex wants to earn a 20% profit for the order, what would be the price they need to charge?

21,000

A product has a selling price of $10. The company hopes to sell $100,000 of its product and fixed costs total to about $20,000. The variable cost per unit is $5. How many units of the product does the company need to sell to hit break-even?

4,000 units

Chambers Company has just gathered estimates for conducting a breakeven analysis for a new product. Variable costs are $7 a unit. The additional plant will cost $48,000. The new product will be charged $18,000 a year for its share of general overhead. Advertising expenditures will be $80,000, and $55,000 will be spent on distribution. If the product sells for $12, what is the breakeven point in units?

40,200 units

Snap Tools, Inc. is a manufacturer of tools for the construction industry. One of the tools manufactured by then is a digital stud finder. The fixed costs for manufacturing the digital stud finder are $56,000, the unit variable costs are $8, and the digital stud finder is sold by then directly to the end-user for $22, exclusively on their website. The number of digital stud finders that Snap Tools, Inc. will need to produce and sell to break even on their investment is _______

4000 units

If a retailer buys a product for $30 and sells it for $50, what is the markup percentage, if the markup is based on cost?

67%

A hardware store advertises a 3/8" Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of illegal pricing practice?

Bait and switch

Which of the following is an example of a price?

College fees

An increase in consumer demand for soft drinks leads to an increased demand by soft drink bottlers for aluminum cans and high-fructose corn syrup, resulting in an increased demand by manufacturers and farmers for aluminum ore and corn. This sequence best illustrates:

Derived demand

Retailing operation which is operated and owned by the brand manufacturer and carries surplus or irregular goods is classified as _________.

Factory outlets

Which of the following is true of a conventional distribution channel?

It has each channel member acting as a separate business unit trying to maximize its own profits.

Which of the following is true of a vertical marketing system?

It has one channel member owning all the other channel members, or has contracts with all other channel members.

Which of the following is true of the intensive distribution technique in marketing?

It makes products available where and when consumers want them

One of the difficulties associated with value-based pricing is that ________

It necessitates a great deal of consumer research to be implemented successfully. (like knowing the demand for the product accurately.)

_______ strategy lowers the price of frequently bought items below the store's cost to bring customers into the store.

Loss leader pricing

Mario us the first retailer in town to sell games for Sony's new PlayStation 3 machine. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a ________ pricing strategy.

Market penetration

Talbot's sells women's clothes. A long sleeve scoop neck t-shirt with the Talbot's label costs $45. By comparison, you can buy a t-shirt for $5 at a Family Dollar Store, but it won't have the prestigious Talbot's label or quality. What kind of demand-oriented approach to pricing does Talbot's use?

Prestige pricing

Formula for makeup based on cost:

Price=total cost + (total cost x markup percentage)

Which of the following are not pricing strategies?

Sales pricing

When Burrough's-Wellcome introduced the first anti-AIDS drugs, they initially set the price at $10,000 for a year's supply, Burrough's-Wellcome was probably pursuing a _______ pricing strategy?

Skimming

________ pricing is when firms charge a high price in the introductory stage and then lower the price over time.

Skimming

A reference price is

The price (or price range) against which buyers compare the actual selling price

predatory pricing

The setting of artificially low prices for products with the intention of driving competitors out of business. Difficult to prove

Which of the following describes a "category killer?"

These are retail outlets with a narrow product focus but with an unusually wide width and depth to that product range

What parts of the TBEV formulae would have to be recalculated if advertising costs increased by $10,000?

Total Fixed Cost, would have to be recalculated

Manufacturer's agents refer to agents who ______

Work for several producers and carry non competitive, complementary merchandise in an exclusive territory

Which of the following is an example of horizontal conflict in the distribution channel?

a Ford car dealer complaining that another Ford dealer is overpricing customers for the same model

Value-based pricing methods include approaches to setting prices that focus on the overall value of the product offering ________

as perceived by the consumer

When Greenbelt Construction Company began building houses in a large subdivision with many other builders, the company priced its homes slightly higher than its competitors and promoted the added quality features found in Greenbelt's homes. Greenbelt was using a(n) _______ pricing strategy.

competitor-based

Which type of shop offers a range of grocery and household items that cater for last minute purchase needs of consumers?

convenience stores

Yvonne estimates the average cost of her floral arrangements is $14 regardless of whether she is making 5 or 20 arrangements that day. She adds a standard markup to the $14 estimate to determine her price. Yvonne is using a(n) _______ pricing method.

cost-based

Producers use marketing intermediaries because they ________.

create greater efficiency in making goods available to target markets

What channel structure is it where the product goes directly from the producer to the final customer?

direct

Which type of retailer involves comparatively low prices as a major selling point combined with the reduced costs of doing business?

discount retailers

A seller that requires that only certain dealers carry its products and also that these dealers don't handle competitors' products, is using the ________ distribution strategy.

exclusive

_________ distribution is a product distribution strategy that involves stocking the products in as many outlets as possible.

intensive

Prestige pricing

involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

General merchandise stores such as Walmart, Kmart, and Target are usually considered ________ retailers.

limited service

With a __________ pricing strategy, marketers set a low initial price for the introduction of a new product or service

market penetration

_________ are a set of interdependent organizations that help make the product or service of the company available for use or consumption by the consumer or business user

marketing channels

Vending machines (like the ones we have at UD buildings) are an example of

nonstore retailing

The prices for all furniture sold at American Furniture Warehouse end in $9.99, such as $599.99, $899.99, etc. American Furniture Warehouse uses _______

odd-even pricing

If a telecommunications company drastically cuts the price for cellular phone service in order to eliminate local competitors, the company could be charged with

predatory pricing

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as _________ strategy

prestige pricing

Cosmetic retailers often have one price for each item but another price for three or four similar items with the same brand, all attractively packaged together. These retailers are using ______

price bundling

_______ is the practice of colluding with other firms to control prices.

price fixing

The key to setting a price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) __________; and (4) competition-oriented approaches.

profit oriented

Which of the following is NOT a commonly used method of classifying retail outlets?

revenues generated

A cluster of neighborhood stores, whose composition is typically unplanned, that serves people within a 5-to 10-mile radius is referred to as a(n) _______.

strip mall

Merchant wholesalers are independently owned firms that _______ the merchandise they handle.

take title to

The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other dishwasher on the market. Based on this price, Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price. Asko used ______

target pricing