Which of the Following Observations About the Total Cost Approach

question 116

Multiple Choice

Which of the following observations about the total cost approach is NOT true?

• A) Includes transportation costs.
• B) Helps find the lowest total cost for the right service level.
• C) Focuses on direct costs and doesn't consider the possible costs of lost sales.
• D) Uses the tools of cost accounting and economics.
• E) Involves evaluating each possible physical distribution system and identifying all of the costs of each alternative.

---

Definitions:

Notes Receivable

Financial assets representing amounts owed to the holder by others through formal written promises to pay at a future date.

Credit Period

The time frame allowed by a seller for a buyer to pay for goods or services, typically expressed in days.

Collateral

An asset that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

Allowance Method

An accounting technique used to estimate and account for bad debts or uncollectible accounts receivable.