For the Year Just Ended, James' Drafting Supplies Had Average

question 205

Multiple Choice

For the year just ended, James' Drafting Supplies had average accounts receivable of $880,000 and total credit sales of $4,800,000. Throughout the year, a factor purchased accounts receivable from the firm at a 2% discount. If the firm wishes to get its factoring costs below 11%, what is the MAXIMUM days in receivables it can have?

• A) 67 days
• B) 70 days
• C) 72 days
• D) 75 days
• E) 87 days

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Definitions:

Pareto Diagram

A graphical representation that displays the relative importance of differences within a set of data, usually to identify which factors are the most significant.

Cause-and-Effect Diagram

A visual tool that helps identify, sort, and display possible causes of a specific problem or quality characteristic.

Cafeteria Dissatisfaction

Reflects displeasure or unhappiness with the services, food quality, or overall experience of dining in a cafeteria setting.

Scatter Diagram

A graphical representation used to visualize the relationship between two quantitative variables, helping to identify any correlations.