Exam 2 Lecture 1

Question 1

Sales mix: positive and negative

Answer 1

A positive sales mix-sell more of higher priced product and this leads to increased sales growth
A negative sales mix-when you sell more of a lower priced product and this leads to decreased sales growth

Question 2

Leveraging costs:

Answer 2

High leveraging cost: A change in the amount of products sold has a drastic effect on gross profit
ex: Tesla and the number of cars it sells

Low leveraging cost: A change in the amount of product sold has a very little effect on gross profit
Ex: Netflix and the amount of viewers it gets for it’s shows

Question 3

profit mix: positive and negative

Answer 3

Positive profit mix: If you sell a higher percentage of a profitable item you will produce higher amounts of gross profit and gross profit margins

Negative profit mix: If you sell a lower percentage of a profitable item you will produce lower amounts of gross profit and gross profit margins

Question 4

How a company is doing in the industry in comparision to it’s global market growth:

Answer 4

Whether a company is declining, rising or staying the same in growth rate it is doing well as with respect to it’s condition as long as it’s growth is above the global market growth rate.

Question 5

Breakeven analysis:

Answer 5

This is how you determine the number you need to sell to make the same amount of gross profit as you would if you sold another portion of units at a lower price.

Question 6

Income statement

Answer 6

This is an accounting principle used to determine the net income of a firm which is the money that the firm makes after it pays off the cost of goods sold, R&D and marketing, Interest to lenders and income tax

Question 7

Depreciation

Answer 7

This is the accounting practice of not including the inital expense it took to purchase the plant, property and equipment and instead spreading it out across the period of time that you would use it for.
Ex: 5 million dollars for 4 years»>1.25 million for 4 years