MKTG 3700 Marketing Metrics Quiz 2

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 net contribution or CTM of 10,000 fans? a. $ 150,000 b. $ 200,000 c. $ 250,000 d. $ 300,000 e. $ 350,000

a. $ 150,000

Sunny Wonderland sells its books to the wholesalers at $8 each, which sells it to the retailers at 10% muc. The retailer sells the books to the consumers at 15%musp. What is the selling price of the wholesalers? a. $ 8.80 b. $ 9 c. $ 10 d. $ 11 e. $ 12

a. $ 8.80

Applet sold 50,000 units of smart phones to retailers for $ 80 per unit. The unit material cost is $20 and unit labor cost is $ 30. The annual manufacturing costs are $ 1 million and the promotion and advertising cost $500,000. What is $profit for the company? a. $0 b. $500,000 c. $1,000,000 d. $1,500,000 e. $4,000,000

a. $0

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? a. $8.00 b. $18.00 c. $36.00 d. $9.00 e. $12.50

a. $8.00

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? a. ($20 * (1- 20%musp)) - $2 b. ($20 * (1- 20%musp)) + $2 c. ($20 / (1 + 20%musp)) - $2 d. ($20 / (1 + 20%musp)) + $2 e. None of (a-d) above.

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

Snowflake Inc. sells its ice skates to the wholesalers at $200 a box. Each box has 5 pairs of ice skates. The wholesalers add $10 to each pair of ice skates and sell them to the retailers. The retailers sell each pair at 10%muc. Which of the following is the correct markup chain for computing the cost per pair of ice skates to the consumer? a. (($ 200 / 5) +10) * (1+ 10%) b. (($ 200 / 5) +10) / (1+ 10%) c. (($ 200 / 5) +10) / (1- 10%) d. ($ 200 +10) * (1+ 10%) e. ($ 200 +10) / (1- 10%)

a. (($ 200 / 5) +10) * (1+ 10%)

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? a. $ 8 b. $ 10 c. $ 40 d. $ 50

b. $ 10

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? a. $ 300,000 b. $ 500,000 c. $ 600,000 d. $ 900,000 e. $ 1,200,000

b. $ 500,000

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? a. $50,000 b. $100,000 c. $2.00 d. $4.00 e. 8.00%

b. $100,000

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? a. $2,142,857 b. $3,000,000 c. $5,000,000 d. $6,000,000 e. $6,500,000

b. $3,000,000

You are explaining the similarities between income statement and contribution analysis to a client. Unit Gross Profit, if data are available and calculated from an income statement, may be treated as approximately equivalent to: a. %C b. $C c. Total $C d. CTM e. Net Profit

b. $C

Star Inc. sells the children toys to the retailers at the % musp of 10%, what is its % muc? a. 10.00% b. 11.11% c. 15.15% d. 16.16% e. None of (a-d) above.

b. 11.11%

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? a. 42,847 b. 60,000 c. 100,000 d. 2,500,000 e. 3,000,000

b. 60,000

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 advertising costs are increased by $ 50,000, what is the #BEP for the company? a. 60,000 b. 65,000 c. 70,000 d. 75,000 e. 80,000

b. 65,000

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? a. Abandon the USA market and intensify operations in China b. Accept the USA distributor demand. It is even better for Tetsu compared to Japan. c. Appeal to the USA Government to intervene. d. Appeal to the Japanese Government to intervene. e. Reject the USA distributor terms which are worse for Tetsu compared to Japan.

b. Accept the USA distributor demand. It is even better for Tetsu compared to Japan.

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 customer's cost. Naturally, JH also know the manufacturer's selling price. Please help the store? a. Selling price = Cost X (1 - % markup) b. Selling Price = Cost / (1 - % markup) c. Selling Price = Cost X (1 + % markup) d. Selling Price = Cost / (1 + % markup) e. None of (a-d) above

b. Selling Price = Cost / (1 - % markup)

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? a. Selling price = Cost X (1 - % markup) b. Selling Price = Cost / (1 - % markup) c. Selling Price = Cost X (1 + % markup) d. Selling Price = Cost / (1 + % markup) e. None of (a-d) above

b. Selling Price = Cost / (1 - % markup)

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? a. $ 200,000 b. $ 300,000 c. $ 450,000 d. $ 500,000 e. $ 600,000

c. $ 450,000

Which of the following statements on channel markup is not correct? a. Channel markup can be expressed both as a dollar amount and as a percentage. b. % markup can be expressed using two bases. c. % markup based on cost is less than %markup based on selling price. d. $ markup can be calculated only one way: $sp minus $cost of a unit e. Typically, channel markup is likely to be different at each channel level.

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

A manufacturer sells $8/unit to wholesaler who marks up by 20% on retailer purchase price. Afterwards, the retailer marks up by 50% on the wholesaler selling price. Here, a. Wholesaler %MUC is 50% b. Wholesaler %MUSP is 25% c. Retailer %MUSP is 33.33% d. Retailer %MUC is 33.33% e. Retailer %MUSP is 50%

c. Retailer %MUSP is 33.33%

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 JH's purchase price. Which of these would get JH off to a good start? a. Cost = Selling Price X (1 - % markup) b. %musp = %muc/(1+%muc) c. Selling Price = Cost X (1 + % markup) d. %muc = %musp/(1-%musp) e. All of the above (a-d) are correct

c. Selling Price = Cost X (1 + % markup)

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: a. $C b. %C c. Total $C d. CTM e. Net Profit

c. Total $C

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... a. wholesaler markup is based on selling price, retailer markup on cost b. wholesaler markup is based on cost, retailer markup on selling price c. both wholesaler and retailer markup are based on cost d. both wholesaler and retailer markup are based on selling price e. none of (a-d) above

c. both wholesaler and retailer markup are based on cost

Brand A has higher %C, but same $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? a. incremental (or ∆) breakeven units will be higher for Brand A than Brand B b. incremental (or ∆) breakeven dollars will be lower for Brand B than Brand A c. incremental (or ∆)breakeven units will be the same for both Brands d. incremental (or ∆) breakeven dollars will be the same for both Brands e. choices a and b above are both correct

c. incremental (or ∆)breakeven units will be the same for both Brands

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 purchase price of the consumers? a. $ 8 b. $8.80 c. $ 10 d. $ 10.35 e. $ 12

d. $ 10.35

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? a. $1,000,000 b. $1,100,000 c. $1,150,000 d. $1,200,000 e. $1,250,000

d. $1,200,000

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? a. $1,000,000 b. $1,100,000 c. $1,150,000 d. $1,200,000 e. $1,250,000

d. $1,200,000

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... a. $19.20 b. $15.00 c. $25.00 d. $20.00 e. None of (a-d) above

d. $20.00

Which of the following statements about $BEP is not correct? a. $BEP= #BEP * USP b. $BEP = TFC / %C c. $BEP = (TFC/$C) * USP d. $BEP = TVC / %C e. $BEP * %C = TFC

d. $BEP = TVC / %C

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? a. 16.67% b. 25% c. 33.33% d. 58.33% e. 50%

d. 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? a. 4,286 b. 42,000 c. 60,000 d. 84,000 e. 90,000

d. 84,000

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: a. %C b. $C c. Total $C d. Unit Variable Cost e. Net Profit

d. Unit Variable Cost

Advise NT Inc. Cost/(1-%musp) calculates the same thing as which of the following? a. cost/ (1+%muc) b. sp* (1-%musp) c. sp * (1+%muc) d. cost*(1+%muc) e. %musp / (1 - %musp)

d. cost*(1+%muc)

Cost *(1+ %muc) calculates the same thing as which of the following? a. cost/ (1+%musp) b. sp/ (1+%muc) c. sp / (1-%muc) d. cost/(1-%musp) e. %muc / (1 + %muc)

d. cost/(1-%musp)

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? a. $10,000 b. $250,000 c. $200.000 d. $25,000 e. $100,000

e. $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 total contribution of the tractors to the company, if they sell 1,000 tractors? a. $ 8,000,000 b. $ 9,500,000 c. $ 10,000,000 d. $ 1,500,000 e. $ 10,500,000

e. $ 10,500,000

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? a. $ 40 b. $ 50 c. $ 55 d. $ 250 e. $ 275

e. $ 275

J. Smith, sales manager for Chemco, an American manufacturer of industrial adhesives has just returned from China with a near-deal for an "exclusive" wholesaler to handle sales to Chinese retailers. However the wholesaler is insisting on a markup of 20% on Chemco's selling prices. In the USA, Chemco's wholesalers typically mark up 25% on the retailer purchase price. How would you advise J. Smith if the goal is a competitive (i.e. lower the better) wholesale selling price in China? (choose the best answer!) a. There is no problem here, since the two markup %s are equivalent b. Negotiate something between 20% and 25% c. Insist on the USA Chemco practice of 25% wholesaler markup on retailer purchase price d. Abandon the China market e. Accept the Chinese wholesaler's demand which, in fact, is better for Chemco.

e. Accept the Chinese wholesaler's demand which, in fact, is better for Chemco.

In BEP/RLS analysis for NT Inc, you may encounter "required" or "desirable" profit objective as: a. a specific $ amount of profit b. desired % profit on sales c. Desired % return on known $ investment d. Desired % or $ increase over previous year's known/already calculated $ profit e. All of (a-d) above are possibilities

e. All of (a-d) above are possibilities

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...... a. %musp is 42.86% b. %muc is 42.86% c. %musp is 30.00% d. %muc is 30.00% e. choices (b) and (c) are both correct

e. choices (b) and (c) are both correct

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? a. BEP units * USP = Total Fixed Costs / %C b. BEP units / USP = Total Fixed Costs / %C c. BEP dollars / USP = Total Fixed Costs / $C d. BEP dollars * USP = Total Fixed Costs / $C e. choices a and c above are both correct. In both, the two sides of the = are the same thing

e. choices a and c above are both correct. In both, the two sides of the = are the same thing

How do you figure out %muc, given %musp a. by assuming sp = $100 and work it out. b. by assuming cost = $100 and working it out c. by using Formula 6. d. by using Formula 5. e. choices a and c are both correct answers.

e. choices a and c are both correct answers.

Product managers strive to have positive $C for each product because... a. positive $C is needed to cover fixed cost. b. positive and healthy $C is vital to generate healthy profits. c. If $C is negative, the product will not be profitable. d. choices a and b are both correct answers e. choices a, b and c are all correct answers

e. choices a, b and c are all correct answers

For the channel chain of manufacturer → wholesaler → retailer → consumer, we know that... a. % markup based on cost for wholesaler is more than % markup based on their selling price. b. % markup based on cost for retailer is less than % markup based on their selling price. c. Manufacturer's selling price is the cost of wholesaler. d. Retailer's cost is the wholesaler's selling price. e. choices a, c and d are all correct answers.

e. choices a, c and d are all correct answers.

If the consumer' purchase price is known, you could work towards the manufacturer's selling price using. a. Top down markup method. b. Bottom up markup method. c. Backward markup method. d. Before-after approach. e. choices b and c are both correct answers.

e. choices b and c are both correct answers.

Assuming no change in other relevant aspects, which of the following could increase the Break Even Point? a. Increasing $C b. Decreasing $C c. Increasing %C d. Decreasing %C e. choices b and d are both correct answers

e. choices b and d are both correct answers