Average Daily Collection of Checks for a Firm Is $50,000

question 123

Multiple Choice

Average daily collection of checks for a firm is $50,000.The firm also writes on the average $35,000 of checks daily.If the collection period for checks is 5 days,calculate the net float.

• A) -$75,000
• B) $75,000
• C) -$425,000
• D) $425,000

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, indicating how much contributes to covering fixed costs and generating profit.

Indirect Costs

Expenses not directly tied to a specific product or service, such as overhead, administrative salaries, and utilities.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Department Contribution Margin

A measure of a department's profitability, calculated as the difference between its sales and variable costs.