Business 201 - Chapter 4 Flashcards Preview

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Flashcards in Business 201 - Chapter 4 Deck (12)
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1
Q

Understanding the organizations cost base allows…?

A

mangers to better assess options in case of unexpected events

2
Q

Cost base

A

total cost associated with delivering the products/services to the market

3
Q

Main percentages to look at when assessing cost base

A

% of cost that are variable vs fixed

cost areas that make up a significant %

4
Q

Total Cost Base = ?

A

Variable Costs + Fixed Costs

5
Q

Variable Costs

A

(Direct Costs) Directly tied to the manufacturing of a product or delivery of a service

6
Q

Fixed Costs

A

(indirect) costs required to run business, not tied to manufacturing product

7
Q

The lower percentage of ____ costs the more control managers have to use cost reduction strategy

A

Fixed Costs

8
Q

When does a sales drop cause more damage?

A

With high fixed costs

9
Q

What is BEP

A

Break even point

level of sales required to cover all costs, zero profit

10
Q

BEP is seen as the minimal acceptable position for…?

A

The short term

11
Q

BEP based on units =

A

Fixed Costs/(selling price-variable cost)

12
Q

What is mark up

A

additional price added by the distributor on top of the manufacturers price to make a profit for the distributor