Extending Credit to a Customer Has Three Major Components ________

question 13

Multiple Choice

Extending credit to a customer has three major components ________.

• A)a policy on how customers will qualify for credit,a policy on the payment plan allowed creditors,and a policy for collecting overdue bills
• B)a policy on how customers will qualify for credit,a policy on paying commissions on sales,and a policy for collecting overdue bills
• C)a policy on how customers will qualify for credit,a policy on the payment plan allowed creditors,and a policy on accounting for depreciation
• D)a policy on how customers will qualify for credit,a policy on accounting for depreciation,and a policy on paying commissions on sales

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Definitions:

Absorption Cost

A method of costing that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Mark-Up Percentage

The percentage added to the cost of goods to cover overhead and profit.

Pricing Policy

A strategic approach adopted by a company to set the cost of its products or services, often considering factors like market demand, production costs, and competition.

Linear Programming

A mathematical technique used for optimizing operations, focusing on achieving the best outcome in a model with linear relationships.