MKTG 3700 Quizzes

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

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

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

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

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

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 retailer's cost?

$16

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

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

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 selling price of the retailer per box of ice skates?

$275 (200+10*5)*(1+10%)=$275. We used F3.

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 contribution of each fan?

$35 USP=$60, UVC=$25, $C=$35

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 of a pair of ice skates to the consumer?

$55

In 2014, ABC Company had net sales of $500,000 and a gross margin of $ 300,000. The total overhead costs were $ 100,000 and the promotion costs were $80,000. The company sold 100,000 units. What was #BEP of the company in 2014?

$60,000

A manufacturer sells each unit for $8 to a wholesaler who marks up by 25% on their purchase price. Afterwards, the wholesaler sells the widget to retailers, who typically mark up by 33.33% on the wholesaler selling price. Here, the correct markup chain for retail selling price is:

$8*(1+25%) * (1+33.33%) You are asked to calculate retail selling price starting with manufacturer selling price in this-top down markup problem. Wholesaler markup is 25%muc and retailer markup is 33.33%, also %muc. Starting with the $8 wholesaler cost, apply F3 to calculate wholesale sp which is the retailer's cost and then F3 again to calculate retail sp.

A wholesaler purchases each unit for $8 from the manufacturer and marks it up by 25% on the manufacturer selling price. Afterwards, the wholesaler sells the widget to retailers, who typically mark up by 33.33% on the consumer's purchase price at the store. Here, the correct markup chain for retail selling price is:

$8*(1+25%) / (1-33.33%) You are asked to calculate retail selling price starting with manufacturer selling price in this-top down markup problem. Wholesaler markup is 25%muc and retailer markup is 33.33% musp. Starting with the $8 wholesaler cost, apply F3 to calculate wholesale sp which is the retailer's cost and then F2 to calculate retail sp.

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?

$8.80

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

Which of the following statements on channel markup is not correct?

% markup based on cost is less than %markup based on selling price.

Please advise Denton Snacks Inc on % Mark Up!. Typically......

%muc > %musp because Selling Price > Cost

Mighty Widget Manufacturers Inc. sells each unit for $7 to Widget Wholesalers who then sell it for $10 to Robust Retailers Inc. Therefore, Widget Wholesaler's......

%muc is 42.86% %musp is 30.00%

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 million $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

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 labor cost is dropped to $ 5, what is the #BEP for the company?

54,546

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 % contribution of the fans?

58.33% USP=$60, UVC=$25, $C=$35. %C=35/60=58.33%

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

6.25%

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%

As sales manager for Mighty Widgets Manufacturers Inc, you are negotiating a 40% markup based on retailer purchase price to 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 equivalent of the 40%.

66.67%

For 2012, ABC Company would like to compare the implication of using a coupon promotion for a particular product versus increasing the sales force commission for the product. You point out that such questions can be easily addressed using the following analysis.

Breakeven analysis

Please advise Denton Snacks Inc on % Mark Up!. Typically......

Correctb. %muc > %musp because Selling Price > Cost The $ markup amount is iodentical for both %muc and %musp. In %muc, that $ is divided by cost. in %musp, by selling price. Since sp is > cost, the denominator is greater in calculating %musp which, therefore, is < %muc.

Macy's sells 12 skirts at $ 50 each and it sells 5 more at $40 each. What is the $ markdown for each additional skirt sold?

Each marked down shirt is marked down 50-40=$10.00

T. Jones, sales manager for AutoComp Inc., an American manufacturer of automotive components for the replacement market has just returned from India with a near-deal for an "exclusive" wholesale distributor to handle sales to independent Indian auto parts retailers. However the wholesaler is insisting on a markup of 25% on AutoComp's selling price. AutoComp would like to continue the typical USA wholesaler mark up of 20% on their retail dealers' purchase price. Which option is better? (choose the best answer!)

No difference. The two markup %s will yield the same selling price

It is January 2015 and John needs to estimate $ annual sales target for his new line of premium all natural ice creams. While the unit selling price is not yet set, John has a good estimate of Total Fixed Costs. He also knows the gross margin % from the just concluded 2014 Income Statement and desired 2015 % profit/sales objective. Please help John.

Reduce %gm by the desired %profit/sales. Then divide TFC by that.

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 Maintain USP, while increasing UVC Choices A and D will both decrease $C. No change in other aspects means no change in TFC. Therefore #BEP, which is TFC/$C will increase when $C goes down.

Advise NT Inc. Which of these is typically treated as a MARKETING variable cost?

Sales force commission

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

Sales force salary Salesforce salary is not per unit of product. It is a lumpsum amount and a fixed cost.

Weird! Chip is sold at $4.00 per bag, with the unit variable cost of $ 1.50. Exotic! Chip is sold at $5.00 per bag and its unit variable cost is $ 2.00. Which of the following statements is (are) wrong?

The Weird! Chip is relatively less profitable than Exotic! Chip.

When a product manager and their consultant evaluate the market potential of a new product using breakeven analysis, which of the following costs should they NOT include in the analysis?

The fee paid to the consultant

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

Which statement(s) on markup formulae is (are) correct?

a. Formula 1 is equivalent to Formula 4, both calculate cost. b. Formula 2 is equivalent to Formula 3, both calculate selling price. c. Formula 1 is equivalent to Formula 2, both calculate cost. d. Formula 3 is equivalent to Formula 4, both calculate selling price. Correcte. choices a and b are both correct answers.

Cost *(1+ %muc) calculates the same thing as which of the following?

cost/(1-%musp)

Brand A has higher $C, but lower %C than Brand B. You have proposals for increasing the fixed cost for each brand by the same $ amount. Which of the following is correct?

delta breakeven dollars will be higher for Brand A than Brand B A has higher $C so, lower delta #BEP compared to B. A has lower %C, so higher delta $BEP, compared to B.

Brand A has same %C, but higher $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 Recall that #BEP=TFC/$C and $BEP=TFC/%C. Change in fixed cost amount is same for both brands. Since %C is the same, delta $BEP will be the same.

Brand A has higher %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 units will be higher for Brand A than Brand B

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?

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

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.

A manufacturer sells $8/unit to wholesalers who mark up by 25% on retailer purchase price. Afterwards, the retailers mark up by 33.33% on the wholesaler selling price. In this instance, how will you calculate retailer selling price?

sp=cost* (1+%muc)