A Firm Has Arranged for a Lockbox System to Reduce

question 191

Essay

A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by 3 days by reducing processing, mail, and clearing float. The firm has total annual outlays of $15,000,000 and currently pays 9 percent for its financing. (Assume a 360-day year.)
(a) Calculate the cash conversion cycle before and after the lockbox system.
(b) Calculate the savings in financing costs from the lockbox system.

Explain the function of public funding in electoral campaigns and the regulations affecting campaign finance.

Analyse the influence of political parties and electoral systems on democracy and governance.

Understand the concept of "dark money" and its implications on electoral transparency and accountability.

Comprehend the implications of not winning the popular vote but securing the presidency through the Electoral College.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, with fixed overhead expenses recorded as period costs.

Inventory

The complete list of items such as property, goods in stock, or the contents of a building.

Absorption Costing

An accounting method that includes all of the costs associated with manufacturing a product in the product's cost.

Closing Inventory

The value of the goods remaining unsold at the end of an accounting period, which becomes the opening inventory for the next period.