Use this information for questions that refer to the Sporting Products, Inc. (SPI) case.Randy Todd, marketing manager for Sporting Products, Inc. (SPI), is thinking about how changes taking place among retailers in his channel might impact his strategy.SPI sells the products it produces through wholesalers and retailers. For example, SPI sells basketballs to Wholesale Supply for $8.00. Wholesale Supply uses a 20 percent markup, and most of its "sport shop" retailer customers, like Robinson's Sporting Goods, use a 33 percent markup to arrive at the price they charge final consumers. However, one fast-growing retail chain, Sports Depot, uses only a 20 percent markup for basketballs, even though it pays Wholesale Supply the same price as other retailers. Furthermore, Sports Depot
occasionally lowers the price of basketballs and sells them at cost, to draw customers into its stores and stimulate sales of its pricey basketball shoes.Sports Depot is also using other pricing approaches that are different from the sports shops that usually handle SPI products. For example, Sports Depot prices all its baseball gloves at $20, $40, or $60-with no prices in between. There are three big bins, one for each price point.Randy is also curious about how Sports Depot's new strategy to increase sales of tennis balls will work out. The basic idea is to sell tennis balls in large quantities to nonprofit groups, who resell the balls to raise money. For example, a service organization at a local college bought 2,000 tennis balls printed with the college logo. Sports Depot charged $.50 each for the tennis balls, plus a $500 one-time charge for the stamp to print the logo. The service group plans to resell the tennis balls for $2.50 each and contribute the profits to a shelter for the homeless.Randy is not certain if Sports Depot's ideas will affect SPI's plans. For example, SPI is considering adding tennis racquets to the lines it produces. This would require a $500,000 addition to its factory, as well as the purchase of new equipment that costs $1,000,000. The variable cost to produce a tennis racquet would be $20, but Todd thinks that SPI could sell the racquet at a wholesale price of $40 each. That would allow most retailers to add their normal markup and make a profit. However, Sports Depot may sells the racquet at a lower than normal price.SPI pays its salespeople a commission on each product they sell. The commission is
A. a variable cost.
B. not included in figuring average cost.
C. part of the total fixed cost.
D. part of the total cost-but not specifically a fixed or a variable cost.
E. None of these answers is correct.
Answer: A
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______ to another can help the other come to know you, understand you, and realize that he or she must also take a risk if a relationship based on mutual trust is to be developed.
Fill in the blank(s) with the appropriate word(s).
Which of the following describes the allocation base for allocating manufacturing overhead costs?
A) the primary cost driver of indirect manufacturing costs B) the estimated base amount of manufacturing overhead costs in a year C) the percentage used to allocate direct labor to Work-in-Process Inventory D) the main element that causes direct costs
The actual physical flow of production will depend on the cost allocation method, such as the FIFO costing method or the average costing method, chosen by the company
Indicate whether the statement is true or false
Expanding multinational corporations:
A. empower nationally focused labor unions B. encourage nationally focused government regulations C. increase demand for new skills and knowledge for managers D. decrease job mobility