UNT MKTG 3700 Quiz 2

Vegi Juice is sold in the supermarket at $12 per case. Each case has 10 bottles of Vegi Juice. The total variable costs per case are $10. What is the $C of the Vegi Juice per bottle?

$ 0.20 $C=12-10=$2 per case = 2/10=$0.20 per bottle.

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 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 ABC's $C for each tractor?

$ 10,500 UVC=8500+commission of 1000=$9,500. $C=20000-9500+$10,500

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 ABC's $C for each tractor?

$ 10,500 UVC=8500+commission of 1000=$9,500. $C=20000-9500=$10,500

Sunny Wonderland sells its books to the wholesalers at $8 each, which sells it to the retailers at the 10% muc. The retailer sells the books to the consumers at 15%musp. What is the retail selling price?

$ 10.35 Retailer buys: F3 = 8*(1+10%)=$8.80. Retailer sells = F2 = 8.80/(1-15%) = $10.35

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 is the unit variable cost of a fan?

$ 25 10+15=$25

Snowflake Inc. sells its ice skates to the wholesalers at $200 a box. Each box has 5 pairs of ice skates. The wholesalers add $10 to each pair of ice skates and sell them to the retailers. The retailers sell each pair at 10%muc. What is the cost to the retailer per box of ice skates?

$ 250 Retailer buys for $200+($10*5)=$250

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 variable costs of 10,000 fans?

$ 250,000 UVC=10+15=25. TVC=25*10000=$250,000

Panda Inc. had total sales of $24,000 from bamboo bowls in 2014. The company sold 6,000 units of bamboo bowls and the total variable costs were $6,000. What is the $C of each bamboo bowl?

$ 3 Total $C=24000-6000=$Hence, $C=18000/6000=$3

Notebooks Inc. sells its notebook to retailers at $500 each. The Notebooks Inc. salesforce receives a commission of 5% on sales. The direct labor and material cost are $275 for every notebook. The company sold 20,000 notebooks in 2014. What is NC's 2014 total $C?

$ 4,000,000 $Commission=5%*500=$25. UVC=275+25=$300. $C=500-$300=$200. Total $C=$200*20,000=$4,000,000

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

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 are the total fixed costs of the company?

$ 500,000 150+200+150=$500,000

Sunny Wonderland sells its books to the wholesalers at $8 each, which sells it to the retailers at the 10% muc. The retailer sells the books to the consumers at 15%musp. What is the cost to the wholesalers?

$ 8

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

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. If the unit selling price is increased to $ 22, what is the $BEP for the company?

$1,100,000 rvs $C=new usp of $22- uvc of ($4+$6)=$12, TFC=500+100=$600,000. rvs #BEP=$600,000/12=50,000, rvs $BEP=50000*$22=$1,100,000

anda 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. If the unit selling price is increased to $ 22, what is the $BEP for the company?

$1,100,000 rvs $C=new usp of $22- uvc of ($4+$6)=$12, TFC=500+100=$600,000. rvs #BEP=$600,000/12=50,000, rvs $BEP=50000*$22=$1,100,000

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 $BEP for the company?

$1,200,000 $C=usp of $20- uvc of ($4+$6)=$10, TFC=500+100=$600,000. #BEP=$600,000/10=60,000, $BEP=60000*$20=$1,200,000

anda 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

ABC manufacturing co has estimated breakeven volume of 50,000 units for its new widget. If $unit variable cost is $23.00 and unit selling price is $25.00, what is the total fixed cost?

$100,000 #BEP=TFC/$C. Here, $C=$25-$23=$2.00. 50,000=TFC/$2.00. Therefore, TFC=$100,000.

BC manufacturing co has estimated breakeven volume of 50,000 units for its new widget. If $unit variable cost is $23.00 and unit selling price is $25.00, what is the total fixed cost?

$100,000 #BEP=TFC/$C. Here, $C=$25-$23=$2.00. 50,000=TFC/$2.00. Therefore, TFC=$100,000.

ABC mfg co has estimated breakeven volume of 50,000 units for its new widget. If fixed costs are $100,000, unit selling price is $25.00 and ABC sales force commission is 8% of selling price, what is their total $ contribution?

$100,000 #BEP=TFC/$C. Therefore $C=TFC/#BEP. Here, $C=$100,000/50,000=$2.00. and Total $C=$2.00*50,000=$100,000. The rest of the information is superfluous.

A retailer sells widgets for $15.00 after marking up 50% on consumer purchase price. The wholesaler had sold the widgets to the retailer at a markup of 20% on manufacturer selling price. Here, what is the correct markup chain for calculating the manufacturer selling price?

$15*(1-50%) / (1+20%)

ABC mfg co has estimated breakeven volume of 50,000 units for its new widget. If fixed costs are $100,000, unit selling price is $25.00 and ABC sales force commission is 8% of selling price, what is their $contribution per unit?

$2.00 #BEP=TFC/$C. Therefore $C=TFC/#BEP. Here, $C=$100,000/50,000=$2.00. The rest of the information is superfluous.

A manufacturer sells $8/unit to wholesaler who marks up by 25% on manufacturer selling price. Afterwards, the retailer marks up by 50% on the consumer purchase price. Here, the retailer selling price is...

$20.00 wholesaler buys for $8 and then marks up 25%muc to sell to the retailer. Then retailer marks up 50%musp. Therefore, the markup chain for calculating retail selling price applies F3, then F2. $8*(1+25%)/(1-50%)=$20

ATT Inc. is developing a new type of cordless phone that would be sold for $ 50 per unit. The unit material cost is $ 10 and unit labor cost is $ 15. The R&D costs incurred so far for the prototype are $ 500,000. The annual manufacturing costs are $ 1 million and the promotion and advertising costs are expected to be $500,000. What is $BEP for the company?

$3,000,000 $C=usp $15 - uvc ($10+$15)= $25. TFC = $1.5 million (exclude R&D, a sunk cost). #BEP=$1.5 million/$25=60,000; $BEP=60000*$50=$3,000,000

ATT Inc. sells a cordless phone for $ 50 per unit. The unit material cost is $ 10 and unit labor cost is $ 15. The annual manufacturing overheads are $ 1 million and promotion and advertising costs are $500,000. The product line has a $ 6 million investment and the expected return on its investment is 10%. What is $RLS for the company?

$4,200,000 C=usp $15 - uvc ($10+$15)= $25. TFC+$ROI = $2.1 million (exclude R&D, a sunk cost). #RLS=$2.1 million/$25=84,000, $RLS=84,000*$50=$4,200,000

A retailer sells a product for $20 after marking up 25% on consumer purchase price. The wholesaler's markup is 50% based on retailer purchase price. In this instance, what is the manufacturer selling price (round to 2 decimals where necessary)?

$7.50 Here, both retailer and wholesaler markup are %musp. Therefore, starting with $20 and going backward, applying F1 twice, wholesaler cost=20*(1-25%)*(1-50%)=$7.50. This is also the manufacturer selling price.

A retailer sells widgets for $15.00 after marking up 50% on wholesaler selling price. The wholesaler had sold the widgets to the retailer at a markup of 20% on the retailer's purchase price. In this instance, what is the manufacturer selling price?

$8.00 Retailer sells for $15.00 and enjoys a 50%muc. Wholesaler has a 20%musp. Therefore, we start with $15.00, applying F4 to calculate retailer cost=wholesaler selling price, then applying F1 to calculate wholesaler cost=manufacturer selling price. usp manufacturer=[15/(1+50%)]*(1-20%)=$8.00

Which of the following statements about $BEP is not correct?

$BEP = TVC / %C

Consumers buy swimming goggles at $20 per pair. The retailer sells the goggles at a 20 %musp. The wholesaler adds a $ 2 markup in selling to the retailer. Which of the following is the correct markup chain for computing the cost of the wholesaler?

($20 * (1- 20%musp)) - $2

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 $40,000. If the company sold 19,000 units last year, what is the profit of the company?

-$5,000 $C=usp of $15- uvc of ($3+$5+$2)=$5; TFC=($60+$40)=$100,000, #BEP=100000/5=20,000. Sales=19,000 units. Shortage=-1,000 units. Loss=-1000*$C of $5=-$5,000

ATT Inc. sells a cordless phone for $ 50 per unit. The unit material cost is $ 10 and unit labor cost is $ 15. The annual manufacturing overheads are $ 1 million and promotion and advertising costs are $500,000. If the promotion cost increased by $ 35,000. What is Δ#BEP for the company?

1,400 $C=usp $15 - uvc ($10+$15)= $25. Delta i.e. the change TFC=$35,000. Therefore Delta #BEP=35000/25=1,400

The American market for memory cards is about $ 1,500 million a year and ABC Company had total sales of $250 million last year, while one of its competitors has total revenue of $ 505 million. What is the company's market share?

16.67% ABC's $250 mill/total market $1,500 mill=16.67%. Note that this is Market Share % in Dollars.

You are the sales manager for Mighty Widgets Manufacturers Inc. You are negotiating a 25% markup based on manufacturer selling price to Widget Wholesalers, a promising new prospect. However, Widget Wholesalers are used to % markup based on retail purchase price. You want to help them understand what you are offering and decide to express it in terms that the Widget Wholesalers can readily understand and relate to. Pick the correct equivalent of the 25%:

20% WW is being offered 25% markup on manufacturer sp i.e. %muc on WW cost. You can

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?

20,000 $C=15-10=5, TFC=$100,000, #BEP=20,000

You are the sales manager for Mighty Widgets Manufacturers Inc. You are negotiating a 40% markup based on retailer purchase price with Widget Wholesalers, a promising new prospect. However, Widget Wholesalers are used to % markup based on manufacturer selling price. You want to help them understand what you are offering and decide to express it in terms that the Widget Wholesalers can readily understand and relate to. Pick the correct expression:

40% / (1-40%)

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 %C of a table fan?

55% $C=$11, %C=11/20=55%

New Concept notebook Inc. sells its pocket pc (PPC) to retailers at $50 each. The retailers add 10 %muc and sell the PPC to the consumers. NC's direct labor and material cost are $20 for every PPC. What is the %C of each PPC to New Concept?

60% $C=50-20=$30. %C=30/50=60%

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. If the advertising costs are increased by $ 50,000, what is the #BEP for the company?

65,000 $C=usp of $20- uvc of ($4+$6)=$10, rvs TFC=500+100+50=$650,000. rvs #BEP=$650,000/10=65,000

The American market for memory cards is about 10 million units a year and ABC Company sold 900,000 units last year, while one of its competitors sold 1 million units. What is ABC's market share?

9% ABC's 900,000/total market 10,000,000=9%. Note that this is Market Share % in Units.

You have a need to explain the differences between RLS and BEP. Which of the following statements will you make?

All (a-d) above

Snacko! is still evaluating "Spicies", a proposed new snack for 2015. First year breakeven requirements and market share implications would naturally play a key role in their decision to go ahead or scrap the idea. In the analyses involved, Snacko! should include, i.e. consider relevant, which of the following costs?

All except a. i.e., b, c and d are all relevant and should be included

The Fancy Jeans brand is sold at $80 per pair, and the unit variable cost is $30. Which of the following statements is correct?

All of (a-d) above

Advise NT Inc. Which of these IS likely to be treated as a unit variable cost?

All of (a-d) above -- (Direct material, Direct labor, Packaging of each unit, Sales force commission)

In a new automobile of specific make and model, which of the following items are fixed costs?

All of (a-d) above -- (Salary of marketing vp, Utility bills for corporate headquarters, Interest payments on long term debt, Media advertising costs)

In a new automobile of specific make and model, which of the following are likely to be variable costs?

All of (a-d) above.

Assuming no change in other relevant aspects, which of the following could increase the Break Even Point?

Choices b and c are both correct answers (Decreasing the USP, Increasing the UVC)

Snacko! is still evaluating "Spicies", a proposed new snack for 2015. First year breakeven requirements and market share implications would naturally play a key role in their decision to go ahead or scrap the idea. In the analyses involved, Snacko! should exclude, i.e. consider as irrelevant, which of the following costs?

Costs of already produced samples of Spicies

You have prepared a 2012 Proforma Income Statement for Denton Snacks. They ask you to give them an idea of the breakeven requirements for the upcoming year. In doing the breakeven analysis, you will typically consider most of the budgeted items under "Marketing, Administrative and General Expenses" category of the Proforma IS as....

Fixed Costs

Advise NT Inc. Which of these is NOT likely to be treated as a unit variable cost?

Sales force salary

John's Hardware, a small retailer in your part of town, would like to determine selling price of a new glue gun. The store's customary % markup is based on JH's selling price. Naturally, JH also know the manufacturer's selling price. Please help the store?

Selling Price = Cost / (1 - % markup)

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?

Selling Price = Cost X (1 + % markup)

IKEA is planning to celebrate its newest store opening in November in Denton by giving away an IKEA 8oz ceramic coffee mug, that they normally sell, free with each purchase. The promotion would be announced by distributing a glossy color multi-page Sunday insert, costing $2 apiece, in area newspaper for a month prior to the IKEA opening. In assessing the financial viability of proposed promotional campaign, how should IKEA treat the cost of the mug and the newspaper inserts?

The mug as a variable cost, the insert as a fixed cost

You are explaining the similarities between income statement and contribution analysis to a client. Gross Profit as reported in a typical Income Statement may be treated as approximately equivalent to:

Total $C

You are explaining the similarities between income statement and contribution analysis to a client. Unit Cost of Goods Sold may be treated as approximately equivalent to:

Unit Variable Cost

Jane is investigating the prospects for a Vista Ridge mall outlet in 2015 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 treated as sunk cost?

Your consulting fee

A wholesaler purchases widgets for $8 per unit from the manufacturer and sells it to retailers who then sell to consumers. The wholesaler marks up by 20% on the retailer purchase price, while the retailers mark up by 25% on the wholesaler selling price. Here, the correct markup chain for calculating the retail selling price to the consumer is:

[$8/(1-20%)] * (1+25%)

It is December 31, 2014 and Jane needs to assess the difficulty of the task ahead for her gourmet sandwich shop in 2015. She is planning to introduce several new sandwiches and hence has not finalized her selling prices. However, Jane has a very good estimate of 2015 Total Fixed Costs and her % contribution from the past year. Jane is able to...

alculate only the 2015 $BEP

You caution NT Inc. that an increase in the # BEP will occur by doing this, assuming no change in other relevant aspects.

choices (a) or (d) will both increase #BEP (Reduce USP, while maintaining UVC, Maintain USP, while increasing UVC)

How do you figure out %muc, given %musp

choices a and c are both correct answers -- (by assuming sp = $100 and work it out, by using Formula 6)

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,

choices a through d are all correct

Product managers strive to have positive $C for each product because...

choices a, b and c are all correct answers

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!).

choices a, b and c are all correct answers ($ 2, 33.33 %muc, 25 %musp)

If the consumer' purchase price is known, you could work towards the manufacturer's selling price using

choices b and c are both correct answers

If the consumer' purchase price is known, you could work towards the manufacturer's selling price using.

choices b and c are both correct answers. (Bottom up markup method, Backward markup method)

Advise NT Inc. Cost/(1-%musp) calculates the same thing as which of the following?

cost*(1+%muc)

dvise NT Inc. Cost/(1-%musp) calculates the same thing as which of the following?

cost*(1+%muc)

Which of the following is the correct way to calculate company market share?

depending upon need and the availability of data, eitherchoice b or choice d may be used

rand A has same %C, but lower $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 dollars will be the same for both Brands

NT Inc sells Product A for $80, with unit variable cost of $16. They also sell Product B for $90 and its UVC is $18. Which product is relatively MORE profitable and why?

no difference in relative profitability between the two products. $C for A = 80-16=$64.00. %C=64/80=80% $C for B = 90-18=$72.00. %C=72/90=80%.

A manufacturer sells $8/unit to wholesalers who mark up by 25% on manufacturer selling price. Afterwards, the retailers mark up by 33.33% on consumer purchase price. Here,

wholesaler markup is based on cost, retailer markup on selling price