Travel and Tow Trailers Inc $$56250

question 1

Multiple Choice

Travel and Tow Trailers Inc.makes small trailers for light-duty towing behind SUVs and small pickup trucks.Its trailers typically sell for $2,500.Many of its customers have asked for credit terms to aid in purchasing the trailers.The firm's finance department has estimated the following profile for its light-duty trailers and customer base: Annual sales: 10,000 trailers
Annual production costs per trailer: $1,500
Lost sales if credit is not provided for customers: 2,000 trailers
Default rate if all customers purchase on credit: 3.00%
What is the dollar value of bad debts the firm expects to accumulate over a year? Given this amount,what is the maximum average amount per unit sold that the firm should spend on credit screening?

• A)$450,000;$45.00
• B)$450,000;$56.25
• C)$4,500,000;$450.00
• D)$4,500,000;$$562.50

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Definitions:

Preventive Maintenance

Regular and systematic inspection, cleaning, and replacement of worn parts, materials, and systems to prevent sudden failure and downtime.

Breakdown Maintenance

Maintenance work performed after a machine or system fails to restore it to operational condition.

MTBF Distribution

Mean Time Between Failures Distribution, a statistical representation of the expected time between failures for a system or component, crucial for reliability analysis.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values deviate from the mean.