For raymond the total cost of opening the new branch

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For Raymond, the total cost of opening the new branch and remaining open for one year will be: A. $500, 000. B. $550,000. C. $650,000. D. $450,000. E. $605,000. Total costs = fixed costs + variable costs, or 500,000 + (1,000 x 50) = $550,000. Revenues are not a factor when calculating total costs. AACSB: Analytic Blooms: Apply Difficulty: 3 Hard Learning Objective: 13-01 List the four pricing orientations. Topic: 5 Cs of Pricing 102. (p. 277) At the break-even point: The break-even point is the place where revenues match total costs, and profits are zero. AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 13-04 Describe how to calculate a product's break-even point. Topic: 5 Cs of Pricing 103. (p. 278) The break-even point is estimated by:
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Contribution per unit is the revenue "left over" after covering variable costs. Break-even point calculates the number of units' contribution needed to cover fixed 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 104. (p. 278) If the fixed costs of manufacturing a new cell phone are $10,000, the sales price is $60, and variable cost per unit is $20, the break-even point is: Contribution per unit is $60-$20 = $40. Then we divide the fixed costs by the contribution per unit. $10,000 divided by $40 = 250 units. AACSB: Analytic Blooms: Apply Difficulty: 3 Hard Learning Objective: 13-01 List the four pricing orientations. Topic: 5 Cs of Pricing 105. (p. 278) Jacob rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20, to cover maid service and utilities. His fixed costs are $100,000 and his profit last year was $20,000. For Jacob, the contribution per unit is: A. $10 0 B. $80 C. $800 D. $1,000 E. It cannot be determined from the information provided.
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Contribution per unit = Revenue - variable cost = $100 - $20 = $80. His fixed costs and profit are not needed for this calculation. AACSB: Analytic Blooms: Apply Difficulty: 3 Hard Learning Objective: 13-04 Describe how to calculate a product's break-even point. Topic: 5 Cs of Pricing 106. (p. 278)
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