The Porcelain Company, Inc. makes five remittances to the bank each month. As th
ID: 2734266 • Letter: T
Question
The Porcelain Company, Inc. makes five remittances to the bank each month. As the company’s Chief Financial Officer, you are conducting a review of the current system being utilized. Your accounting department has provided you with the following information: (assume each month has 30 days) Complete parts a. through d. below. Please show ALL calculations.
A. Calculate the total dollar day float for the month.
B. Calculate the average dollar day float.
C. Calculate the average collection float in days.
D. Calculate the annual cost of float assuming an annual opportunity costs of 6%.
A. Calculate the total dollar day float for the month.
B. Calculate the average dollar day float.
C. Calculate the average collection float in days.
D. Calculate the annual cost of float assuming an annual opportunity costs of 6%.
Explanation / Answer
Answer:A Total equals $3,855,000
Answer:B Average Dollar-Day Float= Total Dollar-Day Float/Days in month
=3855000/30 days
=128500
Answer:C Average Collection Float= Total Dollar-Day Float/Total Remittances
=3855000/965000
=3.99 days
Answer:D Annual cost of Float= Average dollar-day float* annual opportunity costs
=128500*6%
=7710
P A B C=A+B D=C*P Remittances per month in dollars Mail Float Availability Float Total float Dollar-Day Float $200,000 3 1 4 800000 10,000 6 2 8 80000 $400,000 2 1 3 1200000 $5,000 4 1 5 25000 $350,000 3 2 5 1750000 $965,000 3855000Related Questions
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