Terachi berhad, a manufacturer of rubber woods furniture for export, uses 300000 kg. of rubber woods per year. The cost of ordering the rubber woods is 30RM per day. The cost of holding the rubber woods in the warehouse is 20RM per Kg. per year. the lead time is 7 days.

Required:

a. The total credit sales of Terachi Berhad in 2016 were RM50 million. Accounts receivable were RM5 million. Calculate the Average Collection Period.

b. Terachi Berhad sells its product on terms of 7/10 net 35. The total credit sales last year were RM50 million. Accounts receivable were RM5 million . Do customers of Terachi Berhad pay on time? why?