On Average Your Firm Sells $43,209 of Items on Credit

question 132

Multiple Choice

On average your firm sells $43,209 of items on credit each day. Your average inventory period is 32 days and your operating cycle is 57 days. What is your average accounts receivable balance?

• A) $432,090
• B) $878,406
• C) $1,080,225
• D) $1,382,688
• E) $2,462,913

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Definitions:

Plantwide Factory Overhead Rate

A single overhead absorption rate used throughout a factory, applied to all production units irrespective of departmental differences.

Production Department

A production department is a specialized unit within a manufacturing firm that is responsible for the process of converting raw materials into finished goods.

Allocated Per Unit

The process of assigning a portion of total costs directly to individual units of production or service.

Plantwide Factory Overhead Rate

A single overhead absorption rate used throughout an entire plant or factory to allocate overhead costs to products.