\"A company bills its clients under the last quarter of the year according to th

Question

"A company bills its clients under the last quarter of the year according to this:

Oct $300
Nov $600
Dec $400

The average credit time is 36 days. How much can the company estimate to receive from clients in december?"

I know that the answer is calculated in the following way but I don't understand why:

Billed in Oct, expiration in december (6/30) x 300 = 60

Billed in Nov, expiration in december (24/30) x 600 = 480

= 540

What I don't understand is where the numbers in the calculation come from. Please help!

Explanation / Answer

First every month is considered of 30 days. Average billing per day in Oct. = 300/30 Since credit time is 36 days, all bills raised from 25 oct to 30 Oct (i.e. of 6 days) will be received in Dec. from 1 t0 6. Hence bills of Oct. received in Dec. = 6*(300/30) = (6/30)*300 = 60 ($) Similarly, Average billing per day in Nov. = 600/30 Since credit time is 36 days, all bills raised from 1 Nov. to 24 Nov (i.e. of 24 days) will be received in Dec. from 7 t0 30. Hence bills of Nov. received in Dec. = 24*(600/30) = (24/30)*600 = 480 ($) Hope it is now clear to you.

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