It Is Common for the Manufacturer of a New Product

question 83

Multiple Choice

It is common for the manufacturer of a new product to have to pay a retailer $30,000 in order to get the shelf space needed to sell its new product in a particular retail establishment. This $30,000 fee is an example of a

• A) slotting allowance.
• B) promotional allowance.
• C) quantity allowance.
• D) rebates allowance.

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Definitions:

Opportunity Cost

Forgoing the potential gains from various choices by settling on one option.

Supplying Division

The unit or segment within a larger organization responsible for providing materials, products, or services to another division or department.

Transfer Price

The price charged for goods and services transferred between departments or divisions of the same company or between related entities.

Buying Division

A department within a company responsible for purchasing goods, materials, and services required for the business operations.