What Should a Company Do to Improve Its Accounts Receivable

question 85

Multiple Choice

What should a company do to improve its accounts receivable turnover rate?

• A) Lower its selling prices.
• B) Increase its sales force.
• C) Give customers credit terms of 2/10, n/30 rather than 1/10, n/30.
• D) Reduce the number of employees working in the credit department.

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Definitions:

Standard Direct Labor-Hours

The estimated amount of labor hours required to produce a unit of product, used in budgeting and variance analysis.

Denominator Level

The activity level used to compute a predetermined overhead rate, often reflecting capacity or expected usage.

Budget Variance

The difference between budgeted figures for a set period and the actual figures achieved.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost allocated for the actual level of activity.