MKTG 3700
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. Which of the following markup chain formula correctly computes the purchase price of the consumers?
$ 8*(1 + 10 %muc) / (1- 15 %musp) First apply F3 to $8. Then apply F2 to the resulting $8.80
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.
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?
$1,090,920 new $C=usp of $20- uvc of ($4+$5)=$11; new #BEP=TFC of $600,000/$11=54,546, rounded up. new $BEP=54546*$20=$1,090,920
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
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?
$10 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.
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
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
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 Retailer cost, using F1, 20*(1-20%)=$16.00
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 correct markup chain for calculating the manufacturer selling price?
$16 / (1+33.33%) / (1+50%) Here, both retailer and wholesaler markup based on their cost i.e. %muc. Therefore, starting with $16, going backward in the channel and applying F4 twice, wholesaler cost=manufacturer selling price=$16/(1+33.33%)/(1+50%).
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
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.
Star Inc. sells the children toys to the retailers at the % musp of 10%, what is its % muc?
11.11% sp=100, mu=10, cost=90 Therefore %muc=10/90=11.11%. OR use Formula 6 to convert 10% to 11.11%.
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.
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%
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?
84,000 $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
For the channel chain of manufacturer → wholesaler → retailer → consumer, we know that...
All of the other answers except the one that says %muc < %musp are correct.
NT Inc sells Product A for $80, with unit variable cost of $18. They also sell Product B for $90 and its UVC is $16. Which product is relatively MORE profitable and why?
Product B. Higher %C
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.
NT Inc. makes each unit incurring variable costs of $7 for materials and $3 for labor. Another $2 is estimated to be the fixed cost burden on each unit. They then add a profit of 40% on unit selling price. Assume that material and labor are the variable costs. Based on these details....
[Each dollar of sales of the product generates contribution of 50 cents] and [Each unit of the product generates $C of $10] are both correct uvc=$7+$3=$10. total cost = $10+$2=$12. %musp=40%. Therefore, using F2, usp=12/(1-40%)=$20. $C=usp-uvc = $20-$10=$10 per unit. %C=$C/usp=$10/$20=50% i.e. 50 cents on every dollar of sales. Therefore, a and b are both correct.
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.
How do you figure out %muc, given %musp
set sp=$100 and F6 are both correct.
Advise NT Inc. sp/(1+%muc) calculates the same thing as which of the following?
sp * (1-%musp) sp/(1+%muc) is F4 which calculates cost. F1 also does the same thing cost=sp*(1-%musp) and this is choice C.
Product managers use % C to compare the relative profitability. If %C is 30 %, this means...
uvs = 70% and contribution = 30 cents of every sales dollar are both correct.
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
