Which of the Following Statements About the Slotting Allowances Charged

question 110

Multiple Choice

Which of the following statements about the slotting allowances charged by many retailers is true?

• A) Retailers are not justified in charging slotting allowances since most new products are successful.
• B) Slotting allowances are illegal and banned by the federal government.
• C) Large companies with popular brands are the most likely to have to pay slotting allowances.
• D) Retailers justify slotting allowances by pointing to the costs associated with taking on a new product.

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Definitions:

Fixed Manufacturing

Costs associated with manufacturing that remain constant, regardless of the level of production, such as rent for factory premises.

Variable Overhead

Costs that vary with production volume but cannot be traced directly to each unit produced, such as utilities for the manufacturing plant.

Supplies Variance

The difference between the budgeted cost of supplies and the actual cost incurred.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost, which can indicate changes in market prices or issues with budgeting.