Which of the following statements best describes allowances?
A)Allowances are used in conjunction with quantity and cash discounts.
B)Allowances are the same as transfer prices.
C)Allowances are offered only to marketing channel members in order to increase sales.
D)Allowances result in reduction of the list price quoted on a product.

Question

Quizplus · Accepted Answer

Allowances result in a reduction of the list price quoted on a product. It is a promotional tactic used to stimulate sales by reducing the price of the product for a limited time. Examples of allowances include trade-in allowances and promotional allowances. Allowances are not the same as transfer prices and are not necessarily used in conjunction with quantity and cash discounts. While they can be offered to marketing channel members, they can also be offered to end consumers.

Which of the Following Statements Best Describes Allowances