Currently, your firm requires 2 days to process the checks which customers mail in to pay for their credit purchases. The average mail time associated with these payments is 3.4 days and the check clearing time is 2.1 days. If your firm adopts a lockbox system, the mail time will be cut in half. In addition, if employees are reassigned, checks could be processed the same day they are received. How long will your collection time be if both the lockbox system and the job reassignments are implemented?
Collection time = (3.4 × 0.5) + 1 + 2.1 = 4.80 days
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68.
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You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 1.2 days. On an average day, your firm receives 320 checks with an average value of $99 each. The daily interest rate on Treasury bills is 0.014 percent. What is the anticipated amount of the daily savings if this system is implemented?
Daily savings = 320 × $99 × 1.2 × 0.00014 = $5.32
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69.
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Roger's Distributors receives an average of 310 checks a day. The average amount per check is $629. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 1.5 days. The daily interest rate on Treasury bills is 0.011 percent. What is the amount of the expected daily savings of the lockbox system?
Daily savings = 310 × $629 × 1.5 × 0.00011 = $32.17
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70.
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Hand Tools, Inc. receives an average of 611 checks a day. The average amount per check is $425. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 1 day. The bank charges $0.275 a check for this service. The daily interest rate on Treasury bills is 0.013 percent. What is the average daily cost of the lockbox system?
Daily cost = 611 × $0.275 = $168.03
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