If There Are 10 Manufacturers and 200 Retailers,and Each Manufacturer

question 28

Multiple Choice

If there are 10 manufacturers and 200 retailers,and each manufacturer has 12 interactions per year with each retailer at a cost of $100 per transaction,the total transaction cost of doing business through this channel method is ________.

• A)$2,000
• B)$24,000
• C)$200,000
• D)$1,200,000
• E)$2,400,000

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Definitions:

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable and record bad debts expenses.

Recognizing

The process of formally recording or incorporating an item into the financial statements of an entity.

Current Assets

Current Assets are assets that are expected to be converted into cash, sold, or consumed within one year or within a company’s operating cycle if longer than a year.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a specific period.