Tocor Is Considering the Implementation of a Lockbox Collection System

question 24

Multiple Choice

Tocor is considering the implementation of a lockbox collection system for its mid-western and western sales regions. Sales in those two regions are 30% of Tocor's annual sales of $560 million. The lockbox system will cost $187,000 a year and reduce collection time by 3 days. If Tocor could invest any released funds at 10.85%, should it use the lockbox system? Why or why not? (Assume 365 days per year.)

• A) Yes; savings of $149,819
• B) Yes; savings of $312,397
• C) No; loss of $37,181
• D) No; loss of $35,100

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Definitions:

ANCOVA

Analysis of Covariance, a statistical technique that combines ANOVA and regression to analyze the impact of one or more categorical independent variables on a continuous dependent variable, while controlling for one or more covariates.

Dependent Variable

The outcome variable or the predicted variable in a regression equation.

Repeated-Measures ANOVA

A statistical technique used to compare means across more than two conditions or times, with the same subjects participating in all conditions.

ANCOVA

Stands for Analysis of Covariance, a statistical technique that blends ANOVA and regression to evaluate whether the means of a dependent variable are equal across groups, adjusting for the effects of other variables.