U1, AOS 1: KK9 - Price Setting/Quotes Flashcards
What is a recommended retail price?
Recommended retail price is a selling price that is recommended by the manufacturer or wholesaler.
What is a competitors price?
Competitors price is a price charged by business competing in the same market.
What is mark-up percentage?
Mark-up percentage is a way of determining selling prices by adding to the cost price a predetermined profit margin.
What is cost-volume-profit (CVP) analysis?
Cost-Volume-Profit (CVP) analysis is a financial management tool used by businesses to assess the relationship between costs, sales volume, and profitability. It helps organizations understand how changes in sales, costs, and pricing affect their profit and break-even point.
What is the breakeven point?
The level of sales where total revenue equals total expenses and the business makes neither a profit nor a loss.
Variable costs are…
Costs that vary directly with the level of activity.
E.g. materials, electricity, wages, petrol.
Fixed costs are…
Costs that do not vary with the level of activity.
E.g. rent, insurance, salaries, internet
What is the CVP formula?
T/f - Wages are a variable cost.
True - wages are an expense that vary directly with the level of output.
Note: Remember that wages are variable, whilst salaries are a fixed cost as these do not vary with the level of output.
