What is an Allowance & Why do we Use Them?

An allowance is a monetary value that will normalise the retail result. One example of an allowance is for cocktail sales. For example, if a shot of vodka costs £3.00, and a shot of gin costs £3.00. a cocktail using these two ingredients is charged at £5. This means that £1 is being lost every cocktail sold, so this value is given as an allowance. If 100 cocktails were sold, the allowance would be £100 (100 x £1).

 

allowance
/əˈlaʊəns/
noun
the amount of something that is permitted, especially within a set of regulations or for a specified purpose.

Revision #1
Created 25 March 2021 14:19:57 by Adam Ashforth
Updated 15 April 2021 12:45:11 by Adam Ashforth