A Package Delivery Service Currently Has 12 Vans and 16

question 88

Multiple Choice

A package delivery service currently has 12 vans and 16 employees. Vans cost $400 per week and employees earn $300 per week. The last van added 480 packages delivered to total output, while the last employee added 450 packages. The firm

• A) is making the correct decision because the dollar expenditure ($4800) is equal for vans and employees.
• B) should use more vans and fewer employees because the last van added 480 packages while the last employee only added 450 packages.
• C) should use fewer vans and more employees because the last dollar spent on vans yielded 1.2 additional packages delivered, while the last dollar spent on employees yielded 1.5 packages delivered.
• D) could deliver more packages for the same budget by using fewer vans and more employees.
• E) both c and d

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects on its credit sales by comparing net credit sales with the average accounts receivable.

Collection Of Receivables

The process businesses use to pursue payments from customers or clients who have purchased goods or services on credit.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services that have been delivered or used but not yet paid for.

Short-Term Liability

Financial obligations due within a year, such as accounts payable, short-term loans, and other similar debts.