The breakeven point is calculated by dividing the sum of
a. the total fixed costs and shared costs by the difference between the price and the unit variable cost.
b. the total variable costs and shared costs by the difference between the price and the unit fixed cost.
c. the total fixed costs and variable costs by the difference between the price and the unit shared cost.
d. the total shared costs by the difference between the price and the sum of the total fixed costs.
e. the total fixed costs and shared costs by the difference between the price and the sum of the total variable costs.
Question 2Often considered the most critical financial component of working capital is
a. marketable securities
b. inventory management and recovery
c. cash
d. accounts receivable
Question 3The technical skills involved in the delivery of a particular type of service are often quite similar from one service provider to another.
Indicate whether the statement is true or false
Question 4The four main components of print copy are text, slogan, headline, and tagline.
a. True
b. False
Indicate whether the statement is true or false
Question 5Exodus Moving is a small business that was created to serve local furniture stores' delivery needs in the Boulder Colorado area. They have specialized equipment that allows them to lift and transfer large, bulky pieces of furniture with less risk of damage than most traditional movers. Many of these furniture stores do not sell enough volume to keep their own trucks and drivers busy all of the time, so Exodus fills a real market need. As a result, most such stores are very interested in outsourcing delivery service needs. Exodus has attracted many customers from these stores by guaranteeing 48 hour delivery within a 50 mile radius of any of the stores they serve. Eventually, Exodus hopes to attract the business of other retailers who might require delivery services. As a result of vigorous advertising, Exodus has created inelasticity of demand to price changes.
Which of the following will hold true in such a situation?
a. The company's customers will have low brand loyalty.
b. The customers will be less sensitive to price increases by the company.
c. The company will need to lower the price of its delivery services.
d. The company will have low brand equity.
Question 6The difference between the price charged to the service customer and the total (variable + allocated fixed) costs attributed to the service is called
a. contribution margin.
b. net profit.
c. the breakeven point.
d. revenue.
e. None of these.
Question 7All of the current assets of the firm, or more specifically, current assets minus current liabilities equals:
a. cash discounts
b. marketable securities
c. inventory management
d. working capital
Question 8Even for complex services, service customers are often able to accurately evaluate the technical skills of the service personnel.
Indicate whether the statement is true or false
Question 9Though at one time the creative team consisted of an art director and a single copywriter, today it is composed of art directors, copywriters, media planners, and account planners.
a. True
b. False
Indicate whether the statement is true or false
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