if your company decides to lower the selling price of a product, what will you need to do to reach the break…
if your company decides to lower the selling price of a product, what will you need to do to reach the break - even point?\nimprove the quality of the product\nsell more units\nreduce your customer list\nincrease your variable costs\nquestion 4\n3 pts\nwhich type of markup considers the total costs of running the company, not just the wholesale cost of the product, so that the markup amount is all profit?\ncost - based markup\nopportunity - cost markup\nretail - based markup\nbreak - even markup
Answer
Brief Explanations:
- When the selling price of a product is lowered, to reach the break - even point (where total revenue equals total cost), since revenue = selling price * quantity sold, with a lower selling price, more units need to be sold to generate enough revenue to cover costs. Improving product quality doesn't directly address the revenue - cost relationship for break - even after a price cut. Reducing the customer list will decrease sales and make it harder to reach break - even, and increasing variable costs will make it even more difficult to break even.
- Cost - based markup considers all costs of running the company (including fixed and variable costs) and adds a profit margin on top of the total cost of the product. Opportunity - cost markup is related to the cost of forgoing an alternative, retail - based markup is based on retail price, and break - even markup is about covering costs not generating all - profit.
Answer:
- sell more units
- cost - based markup