A Delaware Bank Has Offered to Set Up a Lock-Box

question 8

Multiple Choice

A Delaware bank has offered to set up a lock-box arrangement to process Union Oil Company of California's (UNOCAL) credit card payments from customers in 8 mid-Atlantic states for an annual fee of $150,000 plus $0.05 per payment.Total collections from this area are $547.5 million annually-consisting of an average of 10 payments per year from 1,100,000 credit card customers.Average mailing time for customers from this region would be reduced from 3.5 days currently to 2 days with the lock-box system.Check processing and clearing time also would be reduced from 5 days presently to 1.5 days with the lock-box arrangement.Establishment of the lock-box system would reduce annual payment processing costs at its Los Angeles headquarters by $250,000 and reduce the compensating balance at its Los Angeles bank by $500,000.The Delaware bank will not require UNOCAL to maintain a compensating balance if it establishes a lock-box system.Funds released by the lock-box arrangement can be invested elsewhere in the firm to earn 15% per annum pretax.Determine the net pretax benefits to UNOCAL of establishing the lock-box system with the Delaware bank.(Assume 365 days per year in the calculations.)

• A)$675,000
• B)$750,000
• C)$500,000
• D)$450,000

Acknowledge the significance of feedback and its role in closed-loop control systems.

Identify the characteristics and applications of various controller actions (P, PI, PID) and their effects on process control.

Recognize the role of deadbands in control systems and their impact on process stability.

Understand the fundamental differences between formal and informal organizational structures.

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Definitions:

Period Cost

Expenses that are not directly tied to the production of goods and are charged to the time period in which they are incurred.

Manufacturing Company

A type of company that uses raw materials, parts, and components to assemble finished goods.

Direct Labor

The labor costs directly tied to the production of goods or services, including wages of workers directly involved in manufacturing.

Factory Employees

Workers employed in a manufacturing setting, responsible for the production of goods.