A Selective Distribution Policy Might Be Used to Avoid Selling

question 183

Multiple Choice

A selective distribution policy might be used to avoid selling to wholesalers or retailers that:

• A) Place orders that are too small.
• B) Make too many returns.
• C) Request too much service.
• D) Have poor credit.
• E) All of these alternatives are correct.

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Definitions:

Variable Overhead

Costs that fluctuate with changes in production volume, such as utilities and materials, affecting the cost to produce goods or services.

Direct Materials

The raw materials that are directly traceable to the production of a specific product and constitute a significant portion of the product's direct costs.

Direct Labor-Hours

The total hours worked by employees directly involved in manufacturing products or delivering services.

Variable Overhead

Costs of production that fluctuate with the level of output, such as utility expenses for machinery, which increase with more extensive production.