Which of the following statements about geographical adjustments to price is most accurate?
A)In FOB origin pricing, the seller selects the mode of transportation.
B)In FOB with freight-allowed pricing, the seller subtracts the transportation costs from the list price.
C)Multiple-zone pricing is sometimes referred to as "crazy quilt" pricing.
D)Basing point pricing seems to have been used in industries where freight expenses are only a minor part of the total cost to the buyer.
E)Geographical adjustments can be subject government regulation if the firm cannot supply objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those adjustments need to be made.

Question

Quizplus · Accepted Answer

FOB with freight-allowed pricing is a method in which the seller includes the transportation costs in the list price and then subtracts it for the buyer. In contrast, FOB origin pricing allows the seller to choose the transportation mode, and the buyer pays the freight charges separately. Multiple-zone pricing refers to the method of charging different prices to different geographic regions, and basing point pricing is a method of charging a uniform freight charge from a central location to all customers, regardless of distance, location, or transportation mode. Geographical adjustments can be subject to government regulation if objective data, such as lists of mountains, rivers, weather conditions, etc., cannot support them.

Which of the Following Statements About Geographical Adjustments to Price