GG Metrics Final

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?

$C=$2. USP=$18+$2=$20. Total Sales=$20*50,000=$1,000,000

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?

$C=15-10=5, TFC=$100,000, #BEP=20,000, $BEP=20000*15=$300,000

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 #BEP for the company just for recovering their total fixed costs?

$C=usp $15 - uvc ($10+$15)= $25. TFC = $1.5 million (exclude R&D, a sunk cost, and $ROI since question is asking only for #BEP). #BEP=$1.5 million/$25=60,000

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?

$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

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, after rounding to 2 decimals,

$mu=$2.00 and %muc=50% are both correct. Manufacturer sells to wholesaler for $8.00 Wholesaler markup is based on manufacturer selling price i.e %muc=25% (NOT %musp). Therefore usp of wholesaler, using F3, = $8*(1+25%)=$10.00. Wholesaler $markup=10-8=$2.00. Retailer purchases for $10.00 and marksup based on consumer purchase price i.e. %musp for retailer. Therefore, retailer usp, using F2, = 10/(1-33.33%)=$15.00. Retailer $ markup is 15-10=$5 which is 5/10=50% muc. In other words, retailer's 50%muc is the same as 33.33%musp.

Advise Denton Snacks, Inc., one more time! A 200% markup on selling price is the same as...

200% markup based on cost 100% markup based on cost 66.67% markup based on cost 33.33% markup based on cost All the other 4 answers are incorrect. Assume usp=$100. Markup is 200% of this =$200 Therefore, cost=sp-markup=100-200=-$100. This is not possible, so there is no %muc. Cannot be calculated. Same answer obtained using F6.

Macy's sells 12 skirts at $ 50 each and it sells 5 more at $40 each. What is the % markdown here?

6.25% %markdown=$markdown/total revenue=$50/$800=6.25%

What is Δ$BEP for the company? $C=usp $15 - uvc ($10+$15)= $25. Delta i.e. the change TFC=$35,000. Therefore Delta #BEP=35000/25=1,400, Delta $BEP=1400*50=$70,000

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.

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

At BEP, the companies do not make profits, while the companies make profits at RLS. BEP denotes recovery of FC only while RLS denotes recovery of both FC and profits. The term BEP may be used in place of RLS so long as inclusion of the profit goal is clarified. BEP does not consider profits while RLS considers it.

You are invited to give a lecture on breakeven analysis to the Chamber of Commerce. Which of these represents "equivalence" i.e. both sides of the "=" are the same?

BEP units * USP = Total Fixed Costs / %C and BEP dollars / USP = Total Fixed Costs / $C, In both, left side = right side.

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

Bottom up and backward are both correct.

You have prepared a 2018 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 MAG expenses are lumpsum amounts, not per unit. Therefore, they are fixed costs.

GRP

Gross Rating Points = Impressions (#) / Total Population (#)

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. Choices B and C will both increase $C. No change in other aspects means no change in TFC. Therefore #BEP, which is TFC/$C will decrease when $C goes up.

A manufacturer makes a product for $6 and adds a 25% profit on selling price. They sell to a wholesaler who sells it for 50% markup based on manufacturer selling price. The retailer marks it up by 25% on consumer purchase 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?

Manufacturer markup is 25%musp. Wholesaler markup is 50%muc. Retailer markup is 25% musp. Therefore, the correct markup chain for calculating retail selling price requires applying F2, then F3, then F2 again: {$6/(1-25%)}*(1+50%)/(1-25%) = $16. The difference between manufacturer cost and consumer purchase price is $16-$6=$10.

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,

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 are explaining the similarities between income statement and contribution analysis to a client. Net Contribution may be treated as approximately equivalent to:

Net Profit

The sales manager for Tetsu, Inc., a Japanese maker of electronic components has just returned from the very price-sensitive USA market, searching for an exclusive distributor. The most promising USA prospect insists on a markup of 20% based on Tetsu's selling price. In Japan, Tetsu is used to typical markup of 20% based on their distributor's selling price to the distributor's customers. What would you recommend, if Tetsu's objective is a very competitive price, i.e., lower the USA exclusive distributor selling price the better?

Prospect is demanding 20%muc. Tetsu is presently used to 20%musp based on customer selling price. As you know %muc is > %musp. Therefore, the 20% muc will translate (using F5) into 16.67%musp. This is less than the 20%musp Tetsu is used to and presumably willing to offer. So, the terms are even better for Tetsu than what they are used to.

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?

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

Fancy Jean sells its women's jean for $60 to the wholesalers, and the consumers buy it from retailer for $ 90. The retailers add 10 %muc. Which of the following statements is correct?

Retailer cost, using F4=90/1.10=$81.82. This is also the wholesaler sp. Since wholesaler buys for $60, their $mu=$21.82.

Market Share =

Share of Requirements * Usage Index * Penetration Share

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

Total Variable Cost

Cannibalization Rate =

Volume of _____ Lost to New Product / Brand sales.

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 retailers?

Wholesaler sells and retailer buys for F3 = 8*(1+10%)=$8.80.

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

company unit sales / total industry unit sales company dollar sales / total industry dollar sales depending upon need and the availability of data, both choices that divide by total industry sales are correct. Market share is always company divided by industry. Company's slice of the pie divided by size of total pie.

Frito Lay is changing its marketing mix. You have been asked to explain incremental breakeven analysis. This maybe done for evaluating:

increasing present levels of spending on advertising opening a new distribution warehouse adding more salespeople participation in a new trade show

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

sp / (1+%muc) F1: Cost=sp*(1-%musp) is given. F4: Cost=sp/(1+%muc) calculates the same thing as F1

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.

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...

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

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

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 selling price of the manufacturer?

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 cost, so sp of manufacturer cannot be calculated.

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. What is the selling price of the manufacturer?

wholesaler sp=retailer cost=using F1, 20*(1-20%)=$16.00. wholesaler $mu=$2, so their cost=manufacturer sp=16-2=$14.00.