# The contribution per unit is a price minus total

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The contribution per unit is: A. price minus total costs. B. price minus total variable cost. C. price minus variable cost per unit. D. total revenue minus total cost. E. break-even quantity divided by total fixed costs. Contribution per unit = Revenue - variable cost. This represents the revenue that is "left over" after covering variable costs. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 13-04 Describe how to calculate a product's break-even point. Topic: 5 Cs of Pricing 107. (p. 278) Jason rents rooms in his hotel for an average of \$100 per night. The variable cost per rented room is \$20. His fixed costs are \$100,000 and his target profit is \$20,000. For Jason, to earn his target profit, he will need to rent out __________ rooms. Sales volume = (fixed costs + target profit)/Contribution per unit = (100,000 + 20,000)/ (\$100 - \$20) = \$120,000/\$80 = 1,500 AACSB: Analytic Blooms: Apply Difficulty: 3 Hard Learning Objective: 13-04 Describe how to calculate a product's break-even point.

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Topic: 5 Cs of Pricing 108. (p. 278) Break-even analysis is useful because it allows managers to: It is useful to know how many units a company must sell at a given price to break even. It helps in evaluating the financial feasibility of a proposed price. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 13-04 Describe how to calculate a product's break-even point. Topic: 5 Cs of Pricing 109. (p. 279) One of the limitations associated with break-even analysis is that: Break-even analysis assumes that all products are sold at a single price (or an average price). AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 13-04 Describe how to calculate a product's break-even point. Topic: 5 Cs of Pricing 110. (p. 279) Which of the following markets is most likely to be characterized by oligopolistic competition in the United States? A. Soybe ans. B. Pens and pencils. C. Soft drinks.
D. Men's clothing. E. Electrical service to the home. Soybeans are a purely competitive market; pens and pencils have elements of pure competition (for basic pencils) and of monopolistic competition (for particular types of pens). Men's clothing exhibits monopolistic competition due to the large number of providers, and electrical service is often a monopoly. The soft drink market is marked by a small number of companies--in particular, Coca- Cola and Pepsi-Cola dominate the market, with a few other players and some private label brands.

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