Topic 10.5: Economic viability Flashcards
Cost effectiveness
strategies that minimize the cost of producing a product
Value of money
the relationship between what something is and the value it provides and the cost of purchasing it
Fixed costs
Costs that don’t change regardless of the level of production
Variable costs
Change with the level of production
Total costs
Calculated by adding the fixed and variable costs
Cost analysis
Tool used to determine the feasibility of producing a product
Break-even point
The point of balance between profit and loss
Price minus
Based on market research, manufacturers will determine a maximum price that consumers are willing to pay for a product or service.
Retail price
The manufacturer’s suggested retail price (MSRP) is the price the manufacturer suggests the product to be sold at
Wholesale price
The cost of the product sold by a wholesaler
Typical manufacturing price
The price the manufacturer sells the product at
Target costs
The final cost is determined before manufacturing
Return on investment
The higher the percentage, the greater the ROI
Unit cost
The costs a company incurs to produce, store, and sell one item
Sales volume
Refers to the number of products sold within a specific time
