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IDIS 240 FINAL EXAM STUDY GUIDE SOLUTIONS
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IDIS 240 FINAL EXAM STUDY GUIDE SOLUTIONS List Price - ANSWER-Listed price of a product Selling Price - ANSWER--=list price - trade discounts -the amount that appears on the invoice (amount paid by the customer) -=COGS + Margin or =COGS +Markup =COGS *(100% + Percent Markup) =COGS / (100% - P...

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  • November 4, 2024
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  • 2024/2025
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Copyright © KAYLIN 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED FIRST PUBLISH NOVEMBER, 2024




IDIS 240 FINAL EXAM STUDY GUIDE SOLUTIONS



List Price - ANSWER✔✔-Listed price of a product


Selling Price - ANSWER✔✔--=list price - trade discounts




-the amount that appears on the invoice (amount paid by the customer)




-=COGS + Margin or =COGS +Markup




=COGS *(100% + Percent Markup)




=COGS / (100% - Percent Gross Margin)


Net Price - ANSWER✔✔-Selling price - allowable discounts (cash discounts), customer does not pay the

full selling price and a cash discount is announced to pay the bill asap


Net Sale - ANSWER✔✔--Actual money received by the distributor after discounts and adjustments

(substitutions, different quality or specifications, damaged products or returned goods)

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, Copyright © KAYLIN 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED FIRST PUBLISH NOVEMBER, 2024




-=Net Price - Adjustments


(if no adjustments net sale = net price, if no cash discounts net price = selling price, if no trade discounts

selling price = list price)


Cost of Goods Sold (COGS) - ANSWER✔✔-=Cost of Merchandise + Freight from Manufacturer


Freight - ANSWER✔✔--cost to move an item from where it is manufactured to either the distributors or

customers location


-terms of sale specifies who is responsible for payment


-Large quantities and Least expensive transportation system - manufacturer pays the freight


-Prepay and bill- manufacturer pays the freight but charges for it in the bill


-Free of Board (F.O.B) means (-who pays for transportation, who controls the movement of shipment)


-F.O.B. Shipping point: The manufacturer puts the merchandise on the truck after which it becomes the

responsibility of the distributor


-F.O.B Destination: The manufacturer would put the merchandise on the truck and pays for it to be

delivered.


Trade Discounts - ANSWER✔✔--specified in "term of sale"


-Usually offered by the manufacturer owing to fluctuations in the market conditions like the raw material

cost


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, Copyright © KAYLIN 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED FIRST PUBLISH NOVEMBER, 2024




-Trade discounts may be extended further to customers by the distributor to meet local, competitive

market conditions


-Usually a discount off of a published list price or other published price


-lead discount is 25% (start with this), then subsequent discounts are 10% and then 5%


-EXAMPLE (2000*0.75*0.90*0.95)


Trade Pricing - ANSWER✔✔--Pricing methodology that involves simply negotiating the actual price that

will be paid as opposed to "list price- trade discounts".


-Factors influencing are the same as those influencing trade discounts


-Also known as other names such as "matrix pricing" or just "pricing" // markup


-two drivers to growth of the type (increasing complexity and system capabilities)


Cash Discounts - ANSWER✔✔--Specified in "term of sale".


-Usually offered by the manufacturer to encourage early payments(no difference between cash or check

or mode of payment)


Special Orders - ANSWER✔✔--Usual products with some modification in design, finish, materials or

packing


-Cancellation charges are usually included in terms of sale. Conditions are clearly stated as to who pays

for the order if the order is cancelled.


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Minimum Order vs Freight Allowed - ANSWER✔✔--Minimum Order: Manufacturer specifies the

minimum allowable order as the cost of ordering is high. Distributors collectively buy material from the

manufacturer for small orders of various customers.


-Freight Allowed: The terms of sale should indicate the amount that must be purchased to have the

manufacturer pay the cost of freight for standard shipment.


Claims - ANSWER✔✔--Terms of sale should indicate the time limit, address of contact to claim for billing

or shipping errors.


-Damages must be reported clearly specifying the problem before signing the shipment


Returns - ANSWER✔✔--Terms should include information on how, when and where items may be

returned.


Cash Flow - ANSWER✔✔--Cash in Bank -> Purchased Inventory -> Sold inventory -> Accounts receivable -

> Cash in Bank


-Lesser the cash flow cycle, lesser cash is required to finance the business.


Pricing - ANSWER✔✔-depends upon


-what the manufacturer wants it to be


-greatly influenced by the marketplace




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