WorksheetsRetail Profit Model Test-5
Total questions: 38
Worksheet time: 38mins
Explain the concept of psychological pricing with an example.
Psychological pricing is a strategy that uses even numbers, such as $10.00, to make the price seem higher and less appealing to consumers.
Psychological pricing is a strategy that uses random numbers, such as $7.63, to confuse consumers and make them less likely to purchase.
Psychological pricing is a strategy that uses letters instead of numbers, such as $X.XX, to make the price seem mysterious and untrustworthy to consumers.
Psychological pricing is a strategy that uses odd numbers, such as $9.99, to make the price seem lower and more appealing to consumers.
What are the components included in the cost of goods sold?
Operating expenses
Direct costs of producing the goods
Indirect costs of producing the goods
Sales revenue
What is the formula to calculate gross profit margin?
(Gross Profit / Revenue) * 100
(Net Sales / Gross Profit) * 100
(Gross Profit / Cost of Goods Sold) * 100
(Net Sales - Gross Profit) * 100
Why is gross profit margin important for a retail business?
It shows the efficiency of the business in generating profit.
It only matters for non-retail businesses
It has no impact on the business performance
It is only important for small retail businesses
What are operating expenses in the context of a retail business?
Costs associated with marketing and advertising
Costs associated with purchasing inventory
Costs associated with employee salaries
Costs associated with running the day-to-day operations of the business
Choose the option with the examples of operating expenses in a retail business.
Taxes, interest expenses, legal fees
Rent, utilities, salaries, insurance, marketing, maintenance costs
Employee benefits, customer refunds, product development
Cost of goods sold, inventory, shipping
How is net profit calculated?
By subtracting total expenses from total revenue.
By multiplying total expenses with total revenue.
By dividing total expenses by total revenue.
By adding total expenses to total revenue.
Why is it important for a retail business to monitor and improve its net profit?
It directly impacts the financial health and sustainability of the business.
It has no impact on the business operations.
Improving net profit leads to decreased revenue.
Net profit is not a reliable indicator of financial health.
Which of the following refers to the total amount of money that a retailer brings in? (4.1)
Profit
Revenue
Cost of Goods Sold
Operating costs
Which of the following refers to the amount of money that a retailer makes after accounting for expenses? (4.1)
Profit
Revenue
Cost of Goods Sold
Operation costs
Which of the following refers to the difference between revenue and cost of goods sold? (4.1)
Net profit
Gross profit
Profit margin
Profit margin percentage
Which of the following refers to the difference between revenue and all expenses, including the cost of goods sold and operating expenses? (4.1)
Net profit
Gross profit
Profit margin
Profit margin percentage
What's the term for reducing the price of an item in order to encourage sales? (4.1)
Net profit
Margin
Markup
Markdown
If a business' revenue is $1,150 and its cost of goods sold (COGS) is $734, what is the business' gross profit? (4.1)
$1884
$516
$416
There's not enough information to calculate this.
If a business' gross profit is $100 and its revenue is $500, what is the business' profit margin percentage? (4.1)
20%
100%
25%
There's not enough information to calculate this.
Carla has a small phone-accessory business. She buys accessories from manufactures and resells them to her customer. Which of the following are NOT operating expenses for Carla? (4.2)
Website hosting fees
Transportation costs
The costs of the phone accessories that she buys and resells
Credit card processing fees
Using the manufacturer's suggested retail price is called:
(4.2)
Bundle pricing
Keystone pricing
Psychological pricing
Vendor pricing
Selling multiple products and services together at a lower retail price than if all items were purchased individually is called:
(4.2)
Bundle pricing
Keystone pricing
Psychological pricing
Vendor pricing
Using prices that end in the numbers 5, 7, or 9 can indicate a fair price to customers. This is called:
(4.2)
Bundle pricing
Keystone pricing
Psychological pricing
Vendor pricing
Offering a promotional markdown with a coupon is called:
(4.2)
Competitive pricing
Discount pricing
Markup pricing
Multiple pricing
Selling multiple items for one price, such as, "buy one, get one free," is an example of:
(4.2)
Competitive pricing
Discount pricing
Markup pricing
Multiple pricing
Applying a present margin rate in the cost of items to determine retail price is called:
(4.2)
Competitive pricing
Discount pricing
Markup pricing
Multiple pricing
The Goodwill Thrift Store was working on their pricing strategy. They decided to end all of their prices in .97, a few cents less than the round number. So instead of selling a pair of pants at $15.00, they would sell them at 14.97. This is an example of
Competitive Pricing
Vendor Pricing
Psychological Pricing
Mark Down
_____________ is the amount of money that comes into a retail business minus expenses
Forecasting
Revenue
Net Profit
Reconciliation
Courtney is the buyer for a small produce store and she sells 25 bags of oranges at $12 per bag. Her cost of goods sold per bag is $7. What is Courtney’s gross profit?
$293
$300
$175
$125
Which of the following would you categorize as the COGS if operating a taco truck?
Cost of the meat, shells, and cheese
Cost of the permit to operate the food truck
Gas and maintenance costs
Your salary
The image to the side shows an example of which pricing strategy
Promotional Pricing
Psychological Pricing
Bundle Pricing
Discount Pricing
The “S” in MSRP stands for ______________.
Store
Standard
Suggested
solution
Jim is opening and operating a small online retail shop. What should he take into consideration when setting a retail price?
Customers’ price preferences
The amount of money you want to make on each item
The price set by the competitors on the same or similar products
The cost of products, website service fees, competitor’s prices, and the money you want to make on each item
Macey owns a clothing shop in which her current assortment includes summer apparel. It’s nearing end of summer so in order for her to make room for fall items, she decides to mark the items down in order to move them out of the store. What will happen to her gross profit if she does this?
Gross profit goes up
Gross profit goes down
Gross profit stays the same
Gross profit is unchanged
If a store’s revenue is $3,050 and its cost of goods sold (COGS) is $1110, what is the business’s gross profit?
$400
$2,500
$4,160
$1,940
Sam’s surf shop sold 11 surf boards over the weekend. Each surf board costs $26.00. What’s the revenue for the surf boards?
$200
$370
$268
$286
A business makes $5100 in daily revenue and on average, spends $1400 in the products sold and $2000 on employee salaries and other expenses. What’s the daily net profit of the business?
$1,700
$4,400
$1.500
$3,700
A retailer factors in _________________ when considering utilities, marketing costs and real estate rental costs to their prices
Unnecessary costs
Vendor costs
Manufacturing costs
Costs associated with retailing
_____________ is the amount of money a retailer makes before taking expenses out or the difference between revenue and COGS
Revenue
Net Profit
Gross Profit
Gross Margin
Charlie's bakery always sells their fresh hot French bread for $0.50 below the neighboring bakery. This Pricing strategy is known as:
Markup Pricing
Pricing below the competition
Psychological Pricing
Keystone pricing
Suzie just opened a boutique. She didn't go to business school, she just loves fashion! Math was always difficult for her, so when deciding on her pricing strategy, she decided to use keystone pricing. Which below best describes what she may have done?
She used a markup of 25% on each of her items sold.
She added $5.99 to the cost of each item she sold.
She doubled the vendor cost of her products.
She offered bundle pricing on like items to get customers to buy more at a time.
Which is not true about multiple pricing and price bundling?
Multiple pricing offers a different price per item each week, slowly reducing the costs & price bundling prices them all the same.
Price bundling offers a cheaper price when complementary products are bought together and multiple pricing is offering a single price for multiple items bought together.
Both multiple pricing and price bundling offer a deal for customers through economy pricing.
An example of multiple pricing is selling 3 for $10 and pricing bundling is paying less for purchasing the burger and fries togher.
