SOLVED NUMERICAL PROBLEMS
  1. Find out the average size of receivables if the goods are sold for Rs 10,00,000 on a net 60 credit term with an assumption that 20% of the customers do not pay within the prescribed time. Will there be any change in the average size if the terms of credit change to 2/10 net 60 with an assumption that 60% of the customers avail the discount?

    Solution

    Case I:

    Average collection period = 60 + 0.20 × 60 = 72 days

    Average size of receivables = Rs (10,00,000/360) × 72 = Rs 2,00,000

    Case II:

    Average collection period = (0.6 × 10) + 0.4 (60 + 0.2 × 60)

    = 6 + 28.8 = 35 days

    Average size of receivables = Rs (10,00,000 / 360) × 35 = Rs 97,222.22

     

  2. A firm sells 25,000 units at an average price of Rs 200 per unit. The variable cost ...

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