The Delta Fish Hatchery Factors Its Accounts Receivables Immediately at a 1.5

question 86

Multiple Choice

The Delta Fish Hatchery factors its accounts receivables immediately at a 1.5 percent discount. The average collection period is 34 days. Assume that all accounts are collected in full. What is the effective annual interest rate on this arrangement?

• A)17.61 percent
• B)18.20 percent
• C)18.36 percent
• D)18.78 percent
• E)19.04 percent

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Definitions:

Machine-Hours

The total operating time of machinery used in the production process, expressed in hours, as a basis for allocating manufacturing overhead costs.

Forming

The process of shaping material into desired shapes by applying physical force or through the use of machinery.

Customizing

refers to tailoring products or services to meet specific customer needs or preferences.

Manufacturing Overhead

The expenses linked to manufacturing not including direct labor and materials.