Collegiate Tuxedo Rents Apparel Throughout the Year

question 34

Multiple Choice

Collegiate Tuxedo rents apparel throughout the year. They have experienced non-payment by about 15% of their customers with an average loss of $200. Collegiate wants to stem their losses by using an instant electronic credit check on the customer. These checks will cost them $7 on each of the 1,000 customers. The opportunity cost is 1.5% for the credit period. Should they pursue the credit check?

• A) No, because the $7000 cost is too high.
• B) No, because a $200 loss is minor.
• C) Yes, because the net gain is $30,000.
• D) Yes, because the net gain is $23,000.
• E) Yes, because the net gain is $193,000.

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Definitions:

Organization Chart

A diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.

Fishbone Diagram

A visual tool used for systematic problem analysis, also known as the Ishikawa diagram, it helps identify, explore, and display the possible causes of a specific problem.

Flow Chart

A diagram that represents a process, showing the steps as boxes of various kinds, and their order by connecting them with arrows.

Position Chart

A visual representation that outlines the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.