Question

Shania performed a breakeven analysis and found that she must sell 1322 sweaters to break even. She believes this to be impossible. What can she do? a. Use demand-based pricing. b. Raise her selling price. c. Increase her fixed costs. d. Increase her variable costs.

What level of distribution intensity is best suited to convenience goods?

a. shopping

b. convenience

c. exclusive

d. open Rusty Post Winery has a total fixed cost of $700,000. Its variable cost for producing a bottle of wine is $4.28, and it sells its wine only on site for $13.75. How many bottles of wine must it sell to break even? a. 73,918 bottles b. 50,910 bottles c. 38,825 bottles d. There is not enough information to decide. A channel intermediary that takes legal, but not physical, possession of the products it sells is called........ a ..... does not take legal possession of the goods he sells, but simply helps facilitate transactions between buyers and sellers. provide the highest cost mode of transportation, but they are also the fastest;.....  2 provide the lowest-cost mode of transportation, but they are also the slowest.

Answer 1

· Option B. Raise her selling price.

A break even point can be defined as the point at which the total cost incurred is equal to the total revenues generated. At this point there is neither profit nor loss to the business. Raising her selling price is the most optimum solution from the given options. The other options are wrong. A demand based pricing could result in lower prices due to lower demand. This will further increase her required breakeven. Increasing the fixed and variable costs will also increase the breakeven.

· Open

Convenience goods are mass consuming goods such as grocery items, newspapers, etc. An intensive open distribution strategy that includes the maximum possible outlets is the best distribution strategy. Other options, shopping, exclusive and convenience have relatively less exposure.

· Breakeven point is 73,918 bottles

The formula for calculating the break even units is:

= Fixed costs / (Sales price per unit – Variable cost per unit)

= 700000/(13.75-4.28) = 73918

· Agents. An agent does not take legal possession of the goods he sells, but simply helps facilitate transactions between buyers and sellers.

· Air transport provide the highest cost mode of transportation, but they are also the fastest; Water transport provide the lowest-cost mode of transportation, but they are also the slowest.