If a Company's Average Collection Period Is Higher Than the Industry

question 63

Multiple Choice

If a company's average collection period is higher than the industry average, then the company might be:

• A) enforcing credit conditions upon its customers which are too stringent.
• B) allowing its customers too much time to pay their bills.
• C) too tough in collecting its accounts.
• D) too liquid.

Differentiate between plantwide overhead rates and activity-based costing in allocating overhead costs.

Identify the costs not assigned to products under an activity-based costing system.

Calculate the customer margin under the ABC system.

Understand how ABC information can assist in management decision-making regarding production, pricing, and customer profitability.

---

Definitions:

Quality

The degree to which a product, service, or process meets or exceeds customer expectations or standards.

Customer Service

Assistance and support provided by a company to those people who buy or use its products or services.

Availability

The state of being accessible or obtainable; in commerce, refers to how readily a product or service can be found or provided.

Pricing

The process of determining the value that will be charged for goods or services offered to customers.