Ch 19

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Gross Margin

Another name for the equation [ (Price x Sales Volume) - Total Variable Costs ] is known as:

($1200 + $10,000) / ($16 - $6) = $11,200/$10 = 1,120 Units (The equation must include the total fixed costs plus the profit goal divided by the Contribution Margin per unit, which is the price - total variable costs.)

Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6. How many units does Concession Supply have to sell to make $10,000 this month?

The price would be inelastic because the quantity decrease at 4% is less than the price increase at 10%.

Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6. If Concession Supply increased its price by 10 percent and experienced only a 2 percent decrease in the demand for hotdogs, the demand would be

Create left over inventory at the end of the quarter.

Prices charged above the price equilibrium will most likely produce what effect?

Contribution Margin per unit.

The concept that accurately describes the price of one unit minus the variable cost of producing the same unit of good is known as:

Supply

The quantity of product that will be offered to the market by a supplier at various prices for a specified period is known as:

As price goes up, demand goes down.

What happens when demand is elastic?

Sales maximization

Which of the following pricing strategies is used to sell off excess inventory?

Market Share

Which of these pricing objectives is sales oriented?

Penetration Pricing (as relatively low prices to gain consumer attention.)

Which pricing strategy did Southwest Airlines efficiently utilize to bring awareness to their brand?


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