The buying firm must consider its total cost of accepting a quantity discount. Specifically, the ___________ associated with carrying larger quantities must be compared to the expected benefit of the discounts.

Question

Quizplus · Accepted Answer

The cost associated with carrying larger quantities is referred to as holding costs. The buying firm must compare these holding costs to the expected benefit of the quantity discount. Direct costs, indirect costs, transportation costs, and cash outlay are all important factors to consider when making purchasing decisions, but they are not directly relevant to the decision to accept or reject a quantity discount.

The Buying Firm Must Consider Its Total Cost of Accepting