Mace Auto Parts Company Sells to Retail Auto Supply Stores

question 46

Multiple Choice

Mace Auto Parts Company sells to retail auto supply stores on credit terms of "net 60." Annual credit sales are $300 million (spread evenly throughout the year) and its accounts average 28 days overdue. The firm's variable cost ratio is 0.75 (i.e., variable costs are 75% of sales) . When converting from annual to daily data or vice versa, assume there are 365 days per year. Determine Mace's average collection period.

• A) 88 days
• B) 44 days
• C) 74 days
• D) 60 days

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Definitions:

Pure Monopoly

A market structure where a single supplier controls all production and sales of a particular product or service, with no close substitutes available.

Federal Government

The national government of a federated state, which holds the authority over the entire nation and its international affairs, distinct from state or local governments.

Marketing Role

Refers to the specific set of responsibilities or activities assigned for designing, promoting, and selling products or services.

Oligopoly

A market structure characterized by a small number of firms controlling a large share of the market, leading to limited competition.