As accounts manager in your company, you classify 75% of your customers as "good credit" and the rest as "risky credit" depending on their credit rating. Customers in the
"risky" category allow their accounts to go overdue 50% of the time on average, whereas
Those in the "good" category allow their accounts to become overdue only 10% of the
Time. What percentage of overdue accounts are held by customers in the "risky credit"
Category?
A) 20%
B) 12.5%
C) 93.75%
D) 62.5%

Question

Quizplus · Accepted Answer

Let's assume there are 100 customers. 
75% of customers are "good credit" = 75 customers. 
25% of customers are "risky credit" = 25 customers.

Customers in the "risky credit" category allow their accounts to go overdue 50% of the time on average. So, 25 customers * 50% = 12.5 customers have overdue accounts.

Customers in the "good credit" category allow their accounts to become overdue only 10% of the time. So, 75 customers * 10% = 7.5 customers have overdue accounts.

Therefore, out of the total of 20 overdue accounts (12.5+7.5), 12.5 of them are held by customers in the "risky credit" category.

So, the percentage of overdue accounts held by customers in the "risky credit" category is (12.5/20)*100 = 62.5%.

Thus, the best choice is D, which is 62.5%.

As Accounts Manager in Your Company, You Classify 75% of Your