IDIS 240 ACTUAL TEST BANK FULL
SOLUTION WITH VERIFIED ANSWERS
●● Selling Price
Answer: List Price - Trade Discounts
= COGS + Margin
or
= COGS + Markup
●● Net Price
Answer: Selling price - all allowable discounts (cash discounts), equal to
selling price IF NO DISCOUNTS
●● Cost of Goods Sold (COGS)
Answer: Cost of Merchandise + Freight charges from Manufacturer
●● Freight Cost
Answer: The cost of moving an item from where it was manufactured to
either the distributor or the customer's location
●● Free On Board (FOB)
,Answer: - Commonly used on the invoice to show who is to pay the
transportation charges
- Who is to control the movement of the shipment
- Where the title passes to the buyer
●● Free On Board (FOB) Destination
Answer: Manufacturer pays to have it delivered, own the product while
it's being transported
●● Free On Board (FOB) Shipping Point ***
Answer: Once the manufacturer puts it on the trust, distributor pays for it
and they own it
●● Trade Discounts
Answer: - Means of adjusting the price for variations in the cost of raw
materials
- Competitive pricing in the marketplace
- For services provided by the distributor (stocking the item)
, ●● Trade Pricing ***
Answer: - A pricing methodology that involves negotiating the actual
price that will be paid as opposed to "list price - a discount" method
- Referred to as matrix pricing, a markup from a confidential negotiated
distributor cost
Two drivers to growth of this type
- Increased complexity
- System capabilities
●● Cash Discounts ***
Answer: - Offered to encourage early payment of invoices and when
taken they will enhance the sellers cash flow
- Amount that can be subtracted by the total amount of the invoice by the
distributor before paying the bill
- Offered as encouragement to a distributor to pay their invoice within a
specific amount of time
- CASH DISCOUNTS ARE NOT GIVEN, they are offered then taken or
refused by the distributor
SOLUTION WITH VERIFIED ANSWERS
●● Selling Price
Answer: List Price - Trade Discounts
= COGS + Margin
or
= COGS + Markup
●● Net Price
Answer: Selling price - all allowable discounts (cash discounts), equal to
selling price IF NO DISCOUNTS
●● Cost of Goods Sold (COGS)
Answer: Cost of Merchandise + Freight charges from Manufacturer
●● Freight Cost
Answer: The cost of moving an item from where it was manufactured to
either the distributor or the customer's location
●● Free On Board (FOB)
,Answer: - Commonly used on the invoice to show who is to pay the
transportation charges
- Who is to control the movement of the shipment
- Where the title passes to the buyer
●● Free On Board (FOB) Destination
Answer: Manufacturer pays to have it delivered, own the product while
it's being transported
●● Free On Board (FOB) Shipping Point ***
Answer: Once the manufacturer puts it on the trust, distributor pays for it
and they own it
●● Trade Discounts
Answer: - Means of adjusting the price for variations in the cost of raw
materials
- Competitive pricing in the marketplace
- For services provided by the distributor (stocking the item)
, ●● Trade Pricing ***
Answer: - A pricing methodology that involves negotiating the actual
price that will be paid as opposed to "list price - a discount" method
- Referred to as matrix pricing, a markup from a confidential negotiated
distributor cost
Two drivers to growth of this type
- Increased complexity
- System capabilities
●● Cash Discounts ***
Answer: - Offered to encourage early payment of invoices and when
taken they will enhance the sellers cash flow
- Amount that can be subtracted by the total amount of the invoice by the
distributor before paying the bill
- Offered as encouragement to a distributor to pay their invoice within a
specific amount of time
- CASH DISCOUNTS ARE NOT GIVEN, they are offered then taken or
refused by the distributor
