FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 20: Credit and Inventory Management

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

Which one of the following statements is correct if you purchase an item with credit terms of 1/5, net 15?

A) If you pay within 1 day, you will receive a 5 percent discount.
B) If you pay within 5 days, you will receive a 1 percent discount.
C) If you do not pay within 15 days, you will be charged interest at a 1.5 percent monthly rate.
D) If you pay within 15 days, you will receive a 1/5th percent discount.
E) You must pay the discounted amount within 15 days.

F) B) and D)
G) All of the above

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Which two of the following are the key elements in determining whether or not a switch from a no-credit policy to a credit policy is advisable? I. variable cost per unit II. cash discount percentage III. credit price IV. default rate

A) I and III only
B) II and IV only
C) II and III only
D) I and IV only
E) III and IV only

F) C) and D)
G) A) and B)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

Which one of the following credit instruments is commonly used in international commerce?

The best-selling pair of roller skates The Teen Store offers sells for $79.99 a pair. The store consistently sells 5,700 pairs of these roller skates every year. The fixed costs to order more skates is $68 and the carrying costs are $1.95 per pair. What is the economic order quantity?

You are considering renting a kiosk in the local mall for a period of three months. Any sale you make will be a one-time sale. There is only a 79 percent chance you will collect payment on a credit sale. The product you want to sell has a variable cost of $3.88 and a sales price of $4.99. The monthly interest rate is 1.5 percent. Should you offer people 30 days to pay? Why or why not?

Which one of the following items is most likely a derived-demand inventory item?

Which two of the following are the key considerations for a seller who is establishing the length of the credit period being offered to a customer? I. seller's operating cycle II. customer's operating cycle III. seller's inventory period IV. customer's inventory period

When evaluating the creditworthiness of a customer, the term character refers to the:

Which one of the following inventory-related costs is considered a shortage cost?

Which of the following are frequently used as sources of information when trying to ascertain the creditworthiness of a customer? I. payment history with similar firms II. credit reports III. financial statements IV. information provided by a bank

Which do you feel is the more appropriate upper limit for the credit period that a seller offers to a buyer: the buyer's operating cycle or the buyer's inventory period?

Each year you sell 950 units of a product at a price of $899 each. The variable cost per unit is $575 and the carrying cost per unit is $16.90. You have been buying 100 units at a time. Your fixed cost of ordering is $60. What is the economic order quantity?

Currently, Glasgow Importers sells 280 units a month at a price of $729 a unit. The firm believes it can increase its sales by an additional 40 units if it switches to a net 30 credit policy. The monthly interest rate is 0.5 percent and the variable cost per unit is $480. What is the net present value of the proposed credit policy switch?

Jillian was recently hired by a major retail store. Her job is to determine the probability that individual customers will fail to pay for their charge sales. Jillian's job best relates to which one of the following?

Your current sales consist of 27 units per month at a price of $225 a unit. You are weighing the pros and cons of switching to a net 30 credit policy from your current cash only policy. If you decide to switch your credit policy you also plan to increase the sales price to $240 a unit. If you make the switch you do not expect your total monthly sales quantity to change but you do expect a 3 percent default rate. The monthly interest rate is 1.5 percent. What is the net present value of the proposed credit policy switch?

Which one of the five Cs of credit refers to the general economic situation in the customer's line of business?

Why might firms forego discounts offered by their suppliers even though it is costly to do so? What steps might a firm pursue to be able to take these discounts?

The EOQ model is designed to determine how much:

You are trying to attract new customers that you feel could become repeat customers. The average selling price of your products is $69 each with a $41 per unit variable cost. The monthly interest rate is 1.2 percent. Your experience tells you that 8 percent of these customers will never pay their bill. What is the value of a new customer who does not default on his or her bill?

The period of time that extends from the day a credit sale is made until the day the bank credits a firm's account with the payment for that sale is known as the _____ period.