Arroyo Leather Furniture gives its wholesalers discounts of 30 percent and 10 percent--expecting the wholesalers to pass the 30 percent discount on to their retail customers. These discounts off the manufacturer's suggested retail prices--to cover the costs of the jobs the intermediaries will do--are ______________ discounts.

Question

Quizplus · Accepted Answer

The discounts provided by Arroyo Leather Furniture are functional discounts, also known as trade discounts. These are discounts given to intermediaries such as wholesalers, retailers, and distributors for performing various functions such as selling, storing and transporting the products. Functional discounts are usually given as a percentage off the manufacturer's suggested retail price (MSRP) and are not typically passed on to the end consumer.

Arroyo Leather Furniture Gives Its Wholesalers Discounts of 30 Percent