The Corner Co. deals strictly with four customers. The average amount each customer pays per month along with the collection delay associated with each payment is shown below. Given this
Information, what is the weighted average delay? Assume that every month has 30 days.

Question

Quizplus · Accepted Answer

To calculate the weighted average delay, we need to multiply each customer's delay by their average payment and then sum these up and divide by the total sum of average payments.

Customer 1: 
Average payment = $2,400 
Delay = 30 days 
Weighted payment = 2,400(30) = 72,000

Customer 2: 
Average payment = $3,600 
Delay = 28 days 
Weighted payment = 3,600(28) = 100,800

Customer 3: 
Average payment = $4,800 
Delay = 25 days 
Weighted payment = 4,800(25) = 120,000

Customer 4: 
Average payment = $6,000 
Delay = 15 days 
Weighted payment = 6,000(15) = 90,000

Total weighted payment = 72,000 + 100,800 + 120,000 + 90,000 = 382,800

Total average payment = $2,400 + $3,600 + $4,800 + $6,000 = $16,800

Weighted average delay = 382,800 / (16,800 * 30) = 4.97 days (rounded to two decimal places)

Therefore, the best choice is D.