Collegiate Tuxedo Rents Apparel Throughout the Year

question 15

Multiple Choice

Collegiate Tuxedo rents apparel throughout the year. They have experienced non-payment by about 20% of their customers with an average loss of $300. Collegiate wants to stem their losses by using an instant electronic credit check on the customer. These checks will cost them $12 on each of the 1,000 customers. The opportunity cost is 2.0% for the credit period. Should they pursue the credit check?

• A) No, because the $24,000 cost is too high.
• B) No, because a $300 loss is minor.
• C) Yes, because the net gain is $30,000.
• D) Yes, because the net gain is $48,000.
• E) Yes, because the net gain is $60,000.

---

Definitions:

Government Regulations

Rules established by governments designed to control the way companies and individuals conduct business, protecting the public's interests.

Tailor Products

To customize or modify products to meet specific customer requirements or preferences, enhancing satisfaction and competitive advantage.

Global Company

A business entity that operates in multiple countries around the world, transcending national borders.

Differentiate Marketing

Marketing strategies that highlight the unique aspects of a product or service to distinguish it from competitors in the market.