Chapter 20 Flashcards

1
Q

What are Key Performance Indicators (KPIs) primarily used for?
a) Long-term strategic planning
b) Daily operational tasks
c) Monitoring business performance
d) Employee performance evaluation

A

C

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2
Q

How are KPIs typically presented for easy monitoring?
a) Annual reports
b) Whitepapers
c) Dashboards
d) PowerPoint presentations

A

C

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3
Q

What is the main purpose of displaying KPIs on dashboards?
a) To confuse managers
b) To demonstrate data visualization skills
c) For regular monitoring by managers
d) To impress stakeholders

A

C

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4
Q

Which of the following are examples of KPIs for an online retailer brand?
a) Quarterly profits
b) Social media likes
c) Daily visitors
d) Employee satisfaction

A

C

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5
Q

What role do KPIs play in guiding organizational direction?
a) They are irrelevant for strategic planning
b) They provide insights into performance trends
c) They are only used for marketing purposes
d) They hinder decision-making processes

A

B

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6
Q

What is the primary difference between unit margin and markup?
a) Unit margin is based on selling price, while markup is based on acquisition cost.
b) Unit margin is used for long-term planning, while markup is used for short-term analysis.
c) Unit margin is calculated after taxes, while markup is calculated before taxes.
d) Unit margin is only applicable to service industries, while markup is used in retail

A

A

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7
Q

How is the unit margin percentage calculated?
a) (Selling price per unit - Cost per unit) / Selling price per unit
b) (Selling price per unit - Cost per unit) * 100 / Selling price per unit
c) (Cost per unit - Selling price per unit) * 100 / Selling price per unit
d) (Cost per unit - Selling price per unit) / Cost per unit

A

B

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8
Q

Which of the following statements accurately describes unit margin?
a) It indicates how much extra profit is gained from selling each unit.
b) It is calculated based on the acquisition cost of each unit.
c) It represents the percentage of the selling price that is profit.
d) It remains constant regardless of changes in selling price.

A

C. the unit margin for this product is 40%. This means that for each unit sold, 40% of the selling price contributes to profit after subtracting the unit cost.

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9
Q

What does the markup percentage indicate?
a) The percentage increase in cost per unit.
b) The percentage of profit relative to the selling price.
c) The percentage of selling price above the cost per unit.
d) The percentage of tax included in the selling price

A

c

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10
Q

Which formula correctly represents the calculation of markup percentage?
a) Markup % = (Selling price per unit - Cost per unit) / Cost per unit
b) Markup % = (Selling price per unit - Cost per unit) * 100 / Selling price per unit
c) Markup % = (Selling price per unit - Cost per unit) * 100 / Cost per unit
d) Markup % = (Cost per unit - Selling price per unit) * 100 / Selling price per unit

A

C

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11
Q

What is the primary purpose of calculating price elasticity of demand?
a) To determine the absolute change in demand
b) To assess the sensitivity of demand to price changes
c) To predict future demand trends
d) To analyze supply chain efficiency

A

B

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12
Q

How is price elasticity of demand affected by a higher value?
a) Demand becomes less sensitive to price changes
b) Demand becomes more sensitive to price changes
c) Demand and price changes are inversely related
d) There is no relationship between price elasticity and demand sensitivity

A

B

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13
Q

Which formula correctly represents the calculation of price elasticity of demand?
a) Elasticity = ((Final price - Initial price) / Initial demand) / ((Final demand - Initial demand) / Initial price)
b) Elasticity = ((Final demand - Initial demand) / Initial demand) / ((Final price - Initial price) / Initial price)
c) Elasticity = ((Final demand - Initial demand) / Final price) / ((Final price - Initial price) / Initial demand)
d) Elasticity = ((Final price - Initial price) / Initial demand) / ((Final demand - Initial demand) / Final price)

A

B

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14
Q

Why is price elasticity typically negative in most cases?
a) Because demand always increases with price
b) Because demand decreases with price
c) Because an increase in price is likely to reduce demand
d) Because consumers prefer lower prices regardless of demand

A

C

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15
Q

How does the availability of substitutes impact price elasticity?
a) Higher availability of substitutes leads to lower price elasticity
b) Higher availability of substitutes leads to higher price elasticity
c) Availability of substitutes has no impact on price elasticity
d) Availability of substitutes leads to negative price elasticity

A

B

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16
Q

Which product is likely to exhibit high price elasticity?
a) Luxury cars
b) Designer clothing
c) Generic medications
d) Handcrafted jewelry

A

C

17
Q

In what cases can price elasticity be positive?
a) When demand decreases with price
b) When demand increases with price
c) When substitutes are readily available
d) When brand differentiation is strong

A

b

18
Q

What is a characteristic of products with readily available substitutes?
a) They tend to have lower price elasticity
b) They tend to have higher price elasticity
c) They are always luxury items
d) They are immune to changes in price

A

B

19
Q

What does the breakeven point represent in business?
a) The point at which total revenue exceeds total costs
b) The point at which total revenue equals total costs, resulting in no profit or loss
c) The point at which total costs exceed total revenue
d) The point at which profit is maximized

A

B

20
Q

What does it mean if a business has an unrealistically high breakeven point?
a) The business is making a substantial profit
b) The business is operating efficiently
c) The business may need to adjust prices or reduce costs
d) The business is facing high demand for its products

A

C

21
Q

What does the breakeven volume represent in business?
a) The total number of units a business needs to sell to make a profit
b) The total revenue needed to cover fixed costs
c) The amount of product needed to cover total production costs
d) The total costs of production

A

C

22
Q

How is the breakeven volume calculated?
a) By dividing total fixed costs by the contribution margin per unit
b) By multiplying total fixed costs by the contribution margin per unit
c) By subtracting total variable costs from total revenue
d) By dividing total variable costs by the contribution margin per unit

A

a

23
Q

What does the contribution margin per unit represent?
a) The total profit earned from each unit sold
b) The difference between the selling price and the variable cost per unit
c) The fixed costs associated with each unit produced
d) The total revenue generated by each unit sold

A

b

24
Q

What does the contribution margin per unit reveal about additional sales?
a) It indicates the total profit from additional sales
b) It measures the additional revenue generated by each additional unit sold
c) It represents the total costs associated with each additional unit sold
d) It reflects the fixed costs incurred by each additional unit sold

A

B

25
Q

How does the contribution margin per unit contribute to covering fixed costs?
a) It covers fixed costs entirely
b) It is subtracted from fixed costs to determine profit
c) It indicates the portion of revenue available to cover fixed costs
d) It has no relation to covering fixed costs

A

C

26
Q

How is breakeven revenue calculated?
a) By dividing breakeven volume by selling price per unit
b) By multiplying breakeven volume by selling price per unit
c) By dividing breakeven volume by market size in units
d) By multiplying breakeven volume by market size in dollars

A

B

27
Q

When calculating breakeven market share in dollars, what is the denominator?
a) Market size in units
b) Market size in dollars
c) Selling price per unit
d) Breakeven revenue

A

B

28
Q

What does Customer Lifetime Value (CLV) measure?
a) The total revenue earned from all customers
b) The total profit expected from a single customer over the duration of the relationship
c) The average revenue generated per customer visit
d) The total market share occupied by a firm

A

B

29
Q

Why is estimating CLV important for businesses?
a) To determine the total number of customers
b) To assess the profitability of marketing strategies
c) To calculate total revenue
d) To measure customer satisfaction levels

A

B

30
Q

What does calculating CLV help determine in terms of marketing strategies?
a) The effectiveness of social media marketing
b) The frequency of advertising campaigns
c) The feasibility of marketing, promotion, and pricing strategies
d) The number of sales representatives needed

A

C

31
Q

How does CLV contribute to understanding customer relationships?
a) It indicates the total number of customers served
b) It measures the satisfaction levels of individual customers
c) It helps determine the value of building relationships with specific customers
d) It predicts the likelihood of customer churn

A

C

32
Q

What does a high CLV suggest about a customer?
a) They are unlikely to make repeat purchases
b) They are highly valuable to the business over time
c) They have a low purchasing power
d) They are dissatisfied with the company’s products or services

A

b

33
Q

What does CLV stand for in business?
a) Current Lifetime Value
b) Customer Longevity Value
c) Customer Lifetime Value
d) Consumer Loyalty Value

A

C

34
Q

How is CLV calculated using the simple CLV formula?
a) By multiplying customer retention rate by net income
b) By subtracting customer acquisition cost from total revenue
c) By adding customer retention to customer acquisition cost
d) By subtracting product cost from total revenue

A

B

35
Q

How does a lower retention rate affect CLV?
a) It increases CLV
b) It decreases CLV
c) It has no impact on CLV
d) It makes CLV variable

A

B

36
Q

What happens to CLV with a higher discount rate?
a) It increases
b) It decreases
c) It remains unchanged
d) It becomes more accurate

A

B

37
Q

What does a low CLV suggest about the customer?
a) They are highly profitable
b) They are not worth the investment
c) They are likely to make repeat purchases
d) They have a high purchasing power

A

B

38
Q

CLV formular

A

CLV = [(CR – C) x N] – AC

39
Q
A