A Price Quotation System That Allows the Buyer to Deduct

question 25

Multiple Choice

A price quotation system that allows the buyer to deduct shipping expenses from the cost of purchases is known as _____ pricing.

• A)uniform-delivered
• B)basing-point
• C)freight absorption
• D)FOB plant

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Definitions:

Direct Method

A method of allocating service department costs directly to production departments without considering inter-service department flows.

Accounts Receivable

Funds that clients or customers owe to a company for products or services provided but for which payment has not yet been received.

Accounts Payable

Money owed by a company to its suppliers or vendors for goods and services received, representing a liability on the balance sheet.

Direct Method

A financial accounting method that allocates service department costs directly to production departments without considering services rendered between service departments.