Decision making using decision tree diagram.
A study of accounts receivable at A & W Department stores are either current, one month overdue, two months overdue, written off as bad debt or paid in full. Of those that are current, 80 percent are paid that month and the rest become one month overdue. Of one month overdue bills, 90 percent are paid and the rest become two months overdue. 85 out of those that are two months overdue will get paid or be considered as bad debt.
If the sales are $150,000 per month, conclude how much the company can expect to receive of this amount. How much would become bad debt?