MKTG 3650 EXAM 3 QUESTIONS AND
ANSWERS ALL CORRECT
Postage stamp pricing is technically termed:
Zone Delivered pricing
Uniform Delivered pricing
F.O.B. Mill pricing
F.O.B Delivered pricing - Uniform Delivered pricing
The geographic pricing technique in which a single price is employed for all customers
regardless of geographic location and includes the average cost of shipping and
handling is:
F.O.B Mill
F.O.B Destination
Zone delivered pricing
Uniform Delivered Pricing - Uniform Delivered Pricing
New York Steel Co. is trying to sell high grade stainless steel to a customer located in
Denver Colorado. However, extremely high shipping costs make New York Steel's
product more expensive to buyers than steel sold by a local producer in Pueblo
Colorado. New York Steel should consider using which form of F.O.B pricing?
F.O.B. Mill
F.O.B. Destination
F.O.B. Point of Origin
F.O.B. Basing Point
F.O.B. Zone - F.O.B. Destination
The form of F.O.B. pricing in which the seller fundamentally pays all shipping and
handling costs is:
F.O.B. Mill
F.O.B. Desination
F.O.B. Point of Origin
F.O.B. City Limits
F.O.B. Basing Point - F.O.B. Desination
The form of F.O.B. pricing in which the buyer fundamentally pays all shipping and
handling costs is:
F.O.B. Mill
F.O.B. Desination
F.O.B. Point of Origin
,F.O.B. City Limits
F.O.B. Basing Point - F.O.B. Mill
Marriott is considering opening an autograph series hotel in El Paso, Texas. The hotel
will be in a converted downtown bank building. Estimates are that the hotel must
average an occupancy rate of 57% to break-even. Based on historical sales data for its
other autograph series hotels in similar cities, an average occupancy rate of 63% can
be expected. What would be your recommendation to Marriott's management?
Do not open the hotel, as break-even is less than projected occupancy rates.
Open the hotel since break-even is less than projected occupancy rates.
Do not open the hotel since break-even is greater than projected occupancy rates.
Open the hotel since break-even is greater than occupancy projections. - Open the
hotel since break-even is less than projected occupancy rates.
Danni is planning to open a boutique coffee shop on the town square in Denton, Texas.
She has run the numbers and estimates that she will need to serve 6,000 customers per
month with average checks of $10 each to break-even. Based on industry trade
association data and data compiled by the Denton Chamber of Commerce, Danni can
expect average monthly receipts of $5,000. Based solely on this information, what
should Danni do?
Forego opening the coffee shop in Denton at this time.
Definitely should open the coffee shop.
Look for a potential partner that can share the costs.
Consider an alternative location. - Forego opening the coffee shop in Denton at this
time.
The break-even point is:
The level of sales where total revenue equals total costs
The level of sales which maximizes profit
The total profit likely to be earned at a given price
Where supply equals demand - The level of sales where total revenue equals total costs
When employing life cycle pricing for industrial products, any training, installation,
design, and retooling costs are classified as __ .
Start-up costs
Marginal costs
Post-purchase costs
Investment costs. - Start-up costs
When employing life cycle pricing for industrial products, which of the following costs to
the buyer are not considered?
Marginal costs
Post-purchase costs
The final sales price.
Start-up costs - Marginal costs
,The value-pricing technique in which a selling price for industrial products is set by
comparing the total life-time costs of the seller's product with a competing reference
product is ____ .
Cost comparison pricing
Life cycle pricing
Breakeven pricing
ROI pricing
Experience curve pricing. - Life cycle pricing
The mark-up pricing technique employed by manufacturers to estimate a suggested
retail price (MSRP) is:
Mark-up based on cost
Mark-up based on selling price
Forward chain mark-up pricing
Backward chain mark-up pricing. - Forward chain mark-up pricing
The most common form of mark-up pricing, and the form of mark-up pricing to be used
on all exams unless told otherwise is:
Mark-up based on cost
Mark-up based on selling price
Value mark-up
Break-even mark-up - Mark-up based on selling price
The price for a gallon of 2% milk costs Kroger's $1.20 and Kroger's wants a 50% mark-
up. The resulting selling price to Kroger shoppers is $1.20 + .5($1.20)=$1.80. This is an
example of __ pricing.
Mark-up based on cost
Mark-up based on selling price
Value
Break-even pricing - Mark-up based on cost
The greatest limitation of all cost-based pricing techniques is that:
It's difficult to estimate a product's costs
The techniques are very difficult to understand
The techniques do not take into account demand considerations at the price being set
Cost-based techniques are only useful to manufacturers and cannot be employed by
intermediaries - The techniques do not take into account demand considerations at the
price being set
Assume you are the purchasing agent for a company and have been offered the
following cash discount: 2/15, net 30. What is the implied annual interest rate you will
pay if you do not take advantage of the discount? Assume a 365-day year. Select the
closest answer.
45%
50%
55%
, 60% - 50%
Assume that a manufacturer of recreational vehicles for sportsmen has TFC that equals
$1.5 Million. The vehicles are distributed through a standard channel of distribution
consisting of the manufacturer, several large wholesalers, and many sporting goods
retailers. The manufacturer has decided that the selling price to consumers for the
vehicle should be about $2,500, the price to the retailers should be $1,700, and the
price to the wholesalers should be $1,200. If the manufacturer's AVC for the mower is
$500, what is the producer's break-even point in MARKET SHARE if industry sales are
expected to reach $100,000,000? (Select the closest answer)?
1%
2%
3%
4%
5% - 3%
Assume that a manufacturer of recreational vehicles for sportsmen has TFC that equals
$1.5 Million. The vehicles are distributed through a standard channel of distribution
consisting of the manufacturer, several large wholesalers, and many sporting goods
retailers. The manufacturer has decided that the selling price to consumers for the
vehicle should be about $2,500, the price to the retailers should be $1,700, and the
price to the wholesalers should be $1,200. If the manufacturer's AVC for the mower is
$500, what is the producer's break-even point in DOLLARS? (Select the closest
answer)?
$2,500,000
$2,600,000
$2,700,000
$2,800,000
$2,900,000 - $2,500,000
Farmer Brothers Coffee produces an excellent line of restaurant-grade drip coffee-
maker machine sold to restaurants and delis. The weighted average total variable costs
for making an average coffee maker in the line are $200.00. The weighted average
selling price for the average unit is $400.00. Farmer Brother's fixed costs of production
and sales are $1,500,000 per month. If Farmer Brothers desires $100,000 in profit each
month, how many units must it sell each month? (Pick the closest answer)
7,000
7,500
8,000
8,500
9,000 - 8,000
Assume that a manufacturer of riding lawnmowers has TFC that equals $3 Million. The
mowers are distributed through a standard channel of distribution consisting of the
manufacturer, several large wholesalers, and many lawn and garden retailers. The
manufacturer has decided that the selling price to consumers for the mower should be
ANSWERS ALL CORRECT
Postage stamp pricing is technically termed:
Zone Delivered pricing
Uniform Delivered pricing
F.O.B. Mill pricing
F.O.B Delivered pricing - Uniform Delivered pricing
The geographic pricing technique in which a single price is employed for all customers
regardless of geographic location and includes the average cost of shipping and
handling is:
F.O.B Mill
F.O.B Destination
Zone delivered pricing
Uniform Delivered Pricing - Uniform Delivered Pricing
New York Steel Co. is trying to sell high grade stainless steel to a customer located in
Denver Colorado. However, extremely high shipping costs make New York Steel's
product more expensive to buyers than steel sold by a local producer in Pueblo
Colorado. New York Steel should consider using which form of F.O.B pricing?
F.O.B. Mill
F.O.B. Destination
F.O.B. Point of Origin
F.O.B. Basing Point
F.O.B. Zone - F.O.B. Destination
The form of F.O.B. pricing in which the seller fundamentally pays all shipping and
handling costs is:
F.O.B. Mill
F.O.B. Desination
F.O.B. Point of Origin
F.O.B. City Limits
F.O.B. Basing Point - F.O.B. Desination
The form of F.O.B. pricing in which the buyer fundamentally pays all shipping and
handling costs is:
F.O.B. Mill
F.O.B. Desination
F.O.B. Point of Origin
,F.O.B. City Limits
F.O.B. Basing Point - F.O.B. Mill
Marriott is considering opening an autograph series hotel in El Paso, Texas. The hotel
will be in a converted downtown bank building. Estimates are that the hotel must
average an occupancy rate of 57% to break-even. Based on historical sales data for its
other autograph series hotels in similar cities, an average occupancy rate of 63% can
be expected. What would be your recommendation to Marriott's management?
Do not open the hotel, as break-even is less than projected occupancy rates.
Open the hotel since break-even is less than projected occupancy rates.
Do not open the hotel since break-even is greater than projected occupancy rates.
Open the hotel since break-even is greater than occupancy projections. - Open the
hotel since break-even is less than projected occupancy rates.
Danni is planning to open a boutique coffee shop on the town square in Denton, Texas.
She has run the numbers and estimates that she will need to serve 6,000 customers per
month with average checks of $10 each to break-even. Based on industry trade
association data and data compiled by the Denton Chamber of Commerce, Danni can
expect average monthly receipts of $5,000. Based solely on this information, what
should Danni do?
Forego opening the coffee shop in Denton at this time.
Definitely should open the coffee shop.
Look for a potential partner that can share the costs.
Consider an alternative location. - Forego opening the coffee shop in Denton at this
time.
The break-even point is:
The level of sales where total revenue equals total costs
The level of sales which maximizes profit
The total profit likely to be earned at a given price
Where supply equals demand - The level of sales where total revenue equals total costs
When employing life cycle pricing for industrial products, any training, installation,
design, and retooling costs are classified as __ .
Start-up costs
Marginal costs
Post-purchase costs
Investment costs. - Start-up costs
When employing life cycle pricing for industrial products, which of the following costs to
the buyer are not considered?
Marginal costs
Post-purchase costs
The final sales price.
Start-up costs - Marginal costs
,The value-pricing technique in which a selling price for industrial products is set by
comparing the total life-time costs of the seller's product with a competing reference
product is ____ .
Cost comparison pricing
Life cycle pricing
Breakeven pricing
ROI pricing
Experience curve pricing. - Life cycle pricing
The mark-up pricing technique employed by manufacturers to estimate a suggested
retail price (MSRP) is:
Mark-up based on cost
Mark-up based on selling price
Forward chain mark-up pricing
Backward chain mark-up pricing. - Forward chain mark-up pricing
The most common form of mark-up pricing, and the form of mark-up pricing to be used
on all exams unless told otherwise is:
Mark-up based on cost
Mark-up based on selling price
Value mark-up
Break-even mark-up - Mark-up based on selling price
The price for a gallon of 2% milk costs Kroger's $1.20 and Kroger's wants a 50% mark-
up. The resulting selling price to Kroger shoppers is $1.20 + .5($1.20)=$1.80. This is an
example of __ pricing.
Mark-up based on cost
Mark-up based on selling price
Value
Break-even pricing - Mark-up based on cost
The greatest limitation of all cost-based pricing techniques is that:
It's difficult to estimate a product's costs
The techniques are very difficult to understand
The techniques do not take into account demand considerations at the price being set
Cost-based techniques are only useful to manufacturers and cannot be employed by
intermediaries - The techniques do not take into account demand considerations at the
price being set
Assume you are the purchasing agent for a company and have been offered the
following cash discount: 2/15, net 30. What is the implied annual interest rate you will
pay if you do not take advantage of the discount? Assume a 365-day year. Select the
closest answer.
45%
50%
55%
, 60% - 50%
Assume that a manufacturer of recreational vehicles for sportsmen has TFC that equals
$1.5 Million. The vehicles are distributed through a standard channel of distribution
consisting of the manufacturer, several large wholesalers, and many sporting goods
retailers. The manufacturer has decided that the selling price to consumers for the
vehicle should be about $2,500, the price to the retailers should be $1,700, and the
price to the wholesalers should be $1,200. If the manufacturer's AVC for the mower is
$500, what is the producer's break-even point in MARKET SHARE if industry sales are
expected to reach $100,000,000? (Select the closest answer)?
1%
2%
3%
4%
5% - 3%
Assume that a manufacturer of recreational vehicles for sportsmen has TFC that equals
$1.5 Million. The vehicles are distributed through a standard channel of distribution
consisting of the manufacturer, several large wholesalers, and many sporting goods
retailers. The manufacturer has decided that the selling price to consumers for the
vehicle should be about $2,500, the price to the retailers should be $1,700, and the
price to the wholesalers should be $1,200. If the manufacturer's AVC for the mower is
$500, what is the producer's break-even point in DOLLARS? (Select the closest
answer)?
$2,500,000
$2,600,000
$2,700,000
$2,800,000
$2,900,000 - $2,500,000
Farmer Brothers Coffee produces an excellent line of restaurant-grade drip coffee-
maker machine sold to restaurants and delis. The weighted average total variable costs
for making an average coffee maker in the line are $200.00. The weighted average
selling price for the average unit is $400.00. Farmer Brother's fixed costs of production
and sales are $1,500,000 per month. If Farmer Brothers desires $100,000 in profit each
month, how many units must it sell each month? (Pick the closest answer)
7,000
7,500
8,000
8,500
9,000 - 8,000
Assume that a manufacturer of riding lawnmowers has TFC that equals $3 Million. The
mowers are distributed through a standard channel of distribution consisting of the
manufacturer, several large wholesalers, and many lawn and garden retailers. The
manufacturer has decided that the selling price to consumers for the mower should be
