Quiz 2
Which of the following statements about $BEP is not correct?
$BEP = TVC / %C
Sunny Wonderland sells its books to the retailers at $6 each, which sells it to the consumers at $8. What is the markup of retailer? (MUST choose BEST answer!)
= $C=$2.00, %muc=33.33% and %musp=25% are all correct. 8-6=2, 2/6=33.33%, 2/8=25%
Sunshine company manufactures 100,000 table fans every year with a unit selling price of $20. The direct material cost for a table fan is $5, and direct labor cost is $4. The factory overhead is $150,000 and the administrative costs are $ 200,000. The company also expends $ 150,000 on advertising every year. What is the total $Contribution of the table fans?
=$ 1,100,000 $C=20-9=$11. Total $C=11*100,000=$1,100,000
ABC mfg co has estimated breakeven volume of 50,000 units for its new widget. If fixed costs are $100,000 and unit variable cost is $18.00, what is the $ BEP?
=$1,000,000 $C=$2. USP=$18+$2=$20. Total Sales=$20*50,000=$1,000,000
Panda Toys Inc. plans to sell one line of its panda toys for $ 20. The material cost per unit is $ 4 and unit labor cost is $ 6. The annual overhead fixed costs are $ 500,000 and the promotion and advertising cost is $100,000. What is the $C of this panda toy line?
=$10 $C=usp of $20- uvc of ($4+$6)=$10
Sunny Wonderland sells its books to the wholesalers at $8 each, who sell it to the retailers at a markup of $2. The retailer sells the books to the consumers at 10 % muc. What is the purchase price of the retailer?
=$10 Wholesaler sells and retailer buys for 8+2=$10
ABC Company sells its 4G SD memory card for $ 15 per unit. The unit production cost is $ 3 and unit labor cost is $ 5. The packaging and shipping costs additional $ 2 per unit. The annual manufacturing costs are $ 60,000 and the promotion and advertising cost is $40,000. If the company sold 22,000 units last year, what is the profit of the company?
=$10,000 $C=15-10=5, TFC=$100,000, #BEP=20,000. Excess=Sales-#BEP=22-20=2,000. $Profit=Excess*$C=2,000*$5=$10,000
ABC manufacturing company sells each of its tractors at $20,000 directly to the retailers. ABC pays each of its ten salespersons $60,000 per year. Each salesperson also receives a 5% commission for every tractor sold. The direct labor and material cost $ 8,500. What is total contribution of the tractors to the company, if they sell 1,000 tractors?
=$10,500,000 $C=$10,500 multiplied by 1,000, Total $C=$10,500,000
A manufacturer makes a product for $8 and adds a 20% profit on wholesaler purchase price. The wholesaler then sells it for 50% markup based on manufacturer selling price. The retailer marks it up by 33.33% on wholesaler selling price and sells the product to the consumer. What is the total $ markup in going from manufacturer's cost to consumer purchase price, i.e., the $ difference between the two (round to two decimals)?
=$12 Manufacturer makes for $8.00, then %musp=20%. Use F2, sp=$10.00 Wholesaler buys for $10.00, then %muc=50%, F3, usp=$15.00. Retailer buys for $15.00, then %muc=33.33%, F3, usp=$20.00. Difference between manufacturer cost of $8.00 and retailer selling price of $20.00 is $12.00
ABC Company sells its 4G SD memory card for $ 15 per unit. The unit production cost is $ 3 and unit labor cost is $ 5. The packaging and shipping costs additional $ 2 per unit. The annual manufacturing costs are $ 60,000 and the promotion and advertising cost is $40,000. What is the $BEP for the company?
=$300,000 $C=15-10=5, TFC=$100,000, #BEP=20,000, $BEP=20000*15=$300,000
Cool Fan Company sells 10,000 units to wholesalers each year at $60 per unit. The materials cost $10 per fan and unit labor cost is $15. The total promotion and marketing costs are $100,000. The facility expenses are $80,000 per year and other overheads cost $20,000. What are the total costs of 10,000 fans?
=$450,000 TVC=$250,000 and TFC=$200,000. Therefore Total Costs=$450,000
A retailer sells a product for $16 after marking up 33.33% on wholesaler selling price. The wholesaler's markup is 50% based on manufacturer selling price. In this instance, what is the manufacturer selling price (round to 2 decimals where necessary)?
=$8 Here, both retailer and wholesaler markup are %muc. Therefore starting with $16 and applying F4 twice, wholesaler cost =16/1.3333/1.50=$8.00. This is also the manufacturer selling price.
ABC manufacturing company sells each of its tractors at $20,000 directly to the retailers. ABC pays each of its ten salespersons $60,000 per year. Each salesperson also receives a 5% commission for every tractor sold. The direct labor and material cost $ 8,500. What is the net profit (i.e. net contribution or CTM) to the company, if they sell 1,000 tractors?
=$9,900,000 Total $C=$10,500,000. TFC=$600,000. CTM=10500-600=$9,900,000
Vegi Juice Inc. sells its product to supermarkets at $12 per case. Each case has 10 bottles of Vegi Juice. The total variable costs per case are $10. What is Vegi Juice Inc.'s %C?
=16.67% $C=$2 per case. %C=2/12=16.67%
A manufacturer sells $8/unit to wholesalers who mark up by 20% on retailer purchase price. Afterwards, the retailers mark up by 50.00% on wholesaler selling price. Here, after rounding to 2 decimals
=ALL Manufacturer sells to wholesaler for $8.00 Wholesaler markup is based on retailer purchase price i.e %musp=20%. Therefore usp of wholesaler, using F2, = $8/(1-20%)=$10.00. Wholesaler $markup=10-8=$2.00. Retailer purchases for $10.00.and marksup based on wholesaler selling price i.e. %muc for wholesaler. Therefore, retailer usp, using F3, = 10*(1+50%)=$15.00. Retailer $ markup is 15-10=$5.00
You have a need to explain the differences between RLS and BEP. Which of the following statements will you make?
=All the other 4 answers are correct
Consumers buy swimming goggles at $20 per pair. The retailer sells the goggles at a 20 %musp. The manufacturer adds $ 2 to its cost and sells it to the wholesaler. What is the cost of the wholesaler?
=Cannot calculate. wholesaler sp=retailer cost=using F1, 20*(1-20%)=$16.00. However, we do not know the wholesaler markup, $ or %. Likewise, we know the $mu of manufacturer but not their selling price. So, wholesaler cost cannot be determined.
John's Hardware, a small retailer in your part of town, would like to estimate their ballpark retail selling price for a new glue gun that they buy direct from the manufacturer. The store's customary % markup is based on JH's purchase price. Which of these would get JH off to a good start?
=F3: Selling Price = Cost X (1 + % markup). markup based on manufacturer selling price = %muc for JH. Since they know their cost (purchase price), JH should determine usp using F3. That is, sp = cost * (1+%muc)
You are explaining the similarities between income statement and contribution analysis to a client. Total Expenses may be treated as approximately equivalent to:
=Total fixed cost
Jane is investigating the prospects for a Vista Ridge mall outlet in 2018 that would sell only silk ties. As her professional consultant, please help her, as she tries to figure first year breakeven sales for her store. Which of these is NOT treated as a sunk cost?
=utility, flier and salary are not sunk costs (consulting fee is). Your consulting fee is a "Sunk Cost" that is irrelevant to and hence should not be included as a fixed cost item in Breakeven Analysis. All the other items ARE relevant fixed costs. see M04 discussion on sunk costs as part of the Athens case.
John's Hardware, a small retailer in your part of town, would like to estimate their ballpark retail selling price for a new glue gun that they buy direct from the manufacturer. The store's customary % markup is based on manufacturer selling price. Which of these would get JH off to a good start?
F3: Selling Price = Cost X (1 + % markup)
You point out to NT Inc. that reducing the # BEP can be accomplished by doing this, assuming no change in other relevant aspects.
[Maintain USP, while reducing UVC] or [Increase USP, while maintaining UVC] will both reduce the BEP
You caution NT Inc. that an increase in the # BEP will occur by doing this, assuming no change in other relevant aspects.
[Reduce USP, while maintaining UVC] and [Maintain USP, while increasing UVC] will both increase BEP.
Brand A has higher %C, but same $C compared to Brand B. You have proposals for increasing the fixed cost for each brand by the same $ amount. Which of these is correct?
incremental (or ∆)breakeven units will be the same for both Brands
Brand A has lower %C, but same $C compared to Brand B. You have proposals for increasing the fixed cost for each brand by the same $ amount. Which of these is correct?
incremental (or ∆)breakeven units will be the same for both Brands