Which of the following assumptions is made when declaring that the break-even probability of collection is lower for customers with repeat orders?
A)The discount rate is fairly high
B)The cost of the item will continually decline
C)The sales price of the item will continually increase
D)Payment on the first order insures payments on subsequent orders

Question

Quizplus · Accepted Answer

Customers who have already made repeat orders are more likely to have established a positive credit history with the company and a trust in the quality of the products or services. This reduces the risk of defaulting on payments and thus the break-even probability of collection is lower for them. Discount rates, cost of item and sales price do not necessarily affect this assumption.

Which of the Following Assumptions Is Made When Declaring That