A Price Tactic That Requires the Purchaser to Absorb the Freight

question 113

Multiple Choice

A price tactic that requires the purchaser to absorb the freight costs from the shipping point is called _____.In this case,the farther buyers are from sellers,the more they pay because transportation costs generally increase with the distance merchandise is shipped.

• A) basing-point pricing
• B) zone pricing
• C) uniform delivered pricing
• D) freight absorption pricing
• E) FOB origin pricing

---

Definitions:

Cost of Preferred Stock

The required rate of return by investors for owning preferred stock in a company.

Market Rate of Return

The average or expected rate of return on an investment in the market.

Tax Rate

The rate determining the tax payment required from a person or a corporation’s earnings.

Weighted Average Cost of Capital

A calculation of a firm’s cost of capital in which each category of capital is proportionately weighted, including equity, debt, and other forms of financing.