Producers Often Shift Some Functions to Intermediaries

question 116

Multiple Choice

Producers often shift some functions to intermediaries. Which of the following is the most significant benefit of doing this?

• A) It increases customer loyalty.
• B) It provides the producer with greater control over operations.
• C) It reduces the amount of direct customer interaction.
• D) It lowers the producer's costs and prices.
• E) It ensures greater information security.

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Definitions:

Selling and Administrative Expense Budget

A financial plan outlining the projected expenses for selling activities and general administrative functions of a business.

Variable Expense

Costs that vary directly with the level of output or sales, including materials and labor costs.

Fixed Selling and Administrative Expense

Overhead costs not directly tied to production, including salaries of sales personnel and office rent, that remain constant regardless of sales volume.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, focusing on a company's liquidity and ability to meet short-term obligations.