For the Prince Company,the Average Age of Accounts Receivable Is

question 128

Multiple Choice

For the Prince Company,the average age of accounts receivable is 60 days,the average age of accounts payable is 45 days,and the average age of inventory is 72 days.Assume a 360-day year.If Prince's annual sales are $936,000,what is the firm's average accounts receivable balance?

• A) $104,000
• B) $118,000
• C) $156,000
• D) $212,000
• E) $260,000

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as salaries of managers, depreciation of manufacturing equipment, and rent of the factory building.

Deferred in Inventories

A situation where costs incurred in acquiring or producing inventory are postponed from being recognized as expenses until the goods are sold.

Released from Inventories

The process of moving goods from inventory to be used in production or to be sold, thereby reducing the inventory account.

Unit Product Cost

The total cost (both direct and indirect) to produce a single unit of a product.