Author Question: The marketing mix should be left alone during the maturity stage of the product life cycle; ... (Read 154 times)

jilianpiloj · **on:** Jun 29, 2018

The marketing mix should be left alone during the maturity stage of the product life cycle; tampering with it may bring an early death to the product.

Indicate whether the statement is true or false

Question 2

If fixed costs = 6,000, selling price = 10, and variable costs per unit = 5, what is the breakeven point in units and in dollar sales volume?

pratush dev · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

False

Answer to Question 2

Knowing the number of units necessary to break even is important in setting the price. If a product priced at 10 per unit has an average variable cost of 5 per unit, the contribution to fixed costs is 5. If total fixed costs are 6,000, the breakeven point in units is determined as follows:
breakeven point = fixed costs/per unit contribution to fixed costs

breakeven point = fixed costs/(price - variable costs)

breakeven point = 6,000/(10 - 5)

breakeven point = 1,200 units

To calculate the breakeven point in terms of dollar sales volume, the seller multiplies the breakeven point in units by the price per unit. In the preceding example, the breakeven point in terms of dollar sales volume is 1,200 (units) times 10, or 12,000.