Aggarwal Inc

question 36

Multiple Choice

Aggarwal Inc.buys on terms of 2/10,net 30,and it always pays on the 30th day.The CFO calculates that the average amount of costly trade credit carried is $375,000.What is the firm's average accounts payable balance? (Assume a 365-day year.)

• A)$223,333
• B)$374,951
• C)$457,443
• D)$562,500

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Definitions:

Batch-Level Cost

Costs that are incurred as a result of producing a batch of products, rather than the production process as a whole.

Unit-Level Cost

A cost that is directly incurred for each unit of production or service provided.

Cost Pools

The accumulation of costs related to an indirect activity.

Cost Drivers

Factors or activities that have a direct impact on the total cost of a product or service.