John Is a Factor Who Has Just Bought $40 000

question 136

Short Answer

John is a factor who has just bought $40 000 worth of finished goods for $24 000. The profit that he will make on this transaction depends on
the quality of the receivables, the cost of collecting them, and interest rates.
the cash he has available, and the trade credit he is able to get.
the availability of government loans, the quality of the receivables, and the interest rate.
the interest rate, the cost of collecting the receivables, and the maturity date of bonds of his company.
the general state of the economy, the number of firms who might be interested in the receivables, and the amount of money those firms have available.

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Definitions:

Price Per Unit

Price per unit describes the cost of a single unit of product or service, providing a basis for evaluating and comparing the value of similar items.

Full Cost

The comprehensive total of all costs associated with producing a product or delivering a service, including direct, indirect, fixed, and variable costs.

Cost-Plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost price to ensure a profit margin is achieved.

Mark-Up Percentage

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost price.