In padukha pg no:16.46 illustration no:35 a question give reated to receivable management
The credit manager of ram ltd is re-appraising the company credit policy.The company sells the product on terms of net 30.cost of goods sold is 85% of sales and fixed costs are further 5% of sales.The company its customer on a scale of 1 to 4.During the past five years,the experience was as under:-
scale 1 2 3 4
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default as 0% 2% 10% 20%
a percentage
of sale
average collection 45 42 40 80
period in days
for non defaulting
account
the average rate of interest is 15%.what conclusion do you draw about the company's credit policy?
while answering this question the fixed cost is ignored can anyone tell me the reason.?
CAN ANYONE EXPLAIN WHILE CALCULATING INTEREST COST WHEN TO TAKE FIXED COST+VARIABLE COST OR ONLY VARIABLE COST OR SALES VALUE
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