West Coast Unlimited Is a Wholesaler That Carries Close to 20

question 101

Multiple Choice

West Coast Unlimited is a wholesaler that carries close to 20 000 products. The company has close to 3000 suppliers and sells its products mostly to business and institutional customers. The company markets its products by relying mainly on sales promotion and advertising. Faced with increasing costs, the company is looking at various ways to reduce expenses. West Coast Unlimited's vice-president feels that the company should shift one of its major distribution centres to a low-rent, low-tax area. Which of the following, if true, would weaken the vice-president's argument?

• A) The low-rent, low-tax area is located farther from delivery sites.
• B) West Coast Unlimited's competitors often place their distribution centres in relatively expensive locations.
• C) Better use of technology could reduce distribution costs more than a relocation could.
• D) Final customers are almost always unaware of the location of the wholesaler.
• E) Delayed shipments from suppliers are already creating problems for West Coast Unlimited's distribution network.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, where an estimated amount is deducted from accounts receivable to reflect possible non-collection.

Bad Debts

are amounts owed to a company that are considered uncollectible, leading to a financial loss.

Percentage of Sales

A financial analysis tool used to forecast future expenses, based on a fixed percentage of the total sales.

Allowance for Doubtful Accounts

A contra asset account on a company's balance sheet that estimates the amount of receivables that may not be collected.