Marketing Chapter 13 Part II

_________________ cost is the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. (one word)

Variable

An example of a variable cost is ______.

direct labor used to manufacture the product

Executive salaries are a good example of a(n) ________ cost.

fixed

For a firm, rent and insurance are examples of ______ costs.

fixed

Break-even analysis can help evaluate the impact of changes in _______ and _______ on ________.

price; costs; profit

Fixed costs ______.

remain at the same level despite changes in production

The intersection of the total revenue curve with the total cost curve on a graph of revenue/costs versus quantity is called ______.

the break-even point

At the break-even point, profit is ______.

zero

Variable costs _____ production volume.

change with

If you sell televisions for $250 each, and you have fixed costs of $60,000 and unit variable costs of $50, what is your break-even point?

300 units

The __________-__________ point is the quantity at which total revenue and total cost are equal. (one word each blank)

Blank 1: break Blank 2: even

_________________ cost is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. (one word)

Fixed

You sell picture frames at your business, and because they're flying off the shelves you decide to give your salaried managers a 5% raise. What does this do to your break-even point?

Fixed costs increase, so the break-even point does as well.

The demand curve is ______.

a graph relating quantity sold and price

The point at which the number of units sold generates enough revenue to equal total costs is known as ______.

break-even point

When a firm sells more product than is necessary to cover its total costs, it will ______.

make a profit

On a demand curve, one of the axes represents the price of a product while the other represents the ______.

maximum units sold

The unit variable cost is usually expressed _______.

on a per unit basis

The unit variable cost is ______.

the total variable cost divided by the quantity

The sum of fixed and variable costs is known as ______.

total cost

Break-even analysis analyzes the relationship between which two at various levels of output?

total revenue total cost

A break-even analysis chart shows the intersection of which two curves?

total revenue total costs

Direct labor and materials are considered to be ______ costs.

variable

Total cost represents _____

variable costs plus fixed costs