A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for
ID: 2744871 • Letter: A
Question
A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for $47 and 30 percent are for $79. The $47 checks are delayed two days on average; the $79 checks are delayed three days on average. Assume 30 days in a month.
On average, there is $ that is (Click to select)collecteduncollected and (Click to select)availablenot available to the firm.
What is the weighted average delay? (Round your answer to 2 decimal places. (e.g., 32.16))
If the interest rate is 6 percent per year, calculate the daily cost of the float. (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
a-1 What is the average daily collection float?Explanation / Answer
a-1)
S.No. No. of checks Check size Amount No. of days delayed Dollar days of float
1 5700x70% x 47 187530 x2 375060
2. 5700x30% x79 135090 x3 405270
Total 322620 780330
Average daily float =Total dollar days of float/ 30
=780330/30
=26,011
a-2)
On an average 26,011 is uncollected to the firm.
b-1)
% Delay delay x %
70% 2 days 2x70% = 1.4 days
30% 3 days 3x30% = 0.9 days
Total delay 2.3 days
b-2)
Average check size = 47x70% + 79x30%
=56.6
No. of checks in one month = 5700
Total float = no. of checks in a month x average check size x average delay /30
= 5700 x 56.6 x 2.3 /30
=24734.2
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.