A company has implemented a flat interest calculation late charges. Determine the late charge
based on:
• Amount Overdue = $1,500
• Interest Rate = 20%
• Days Overdue = 10
• Days in period = 30
• Outstanding Charges = $80
A.
$300
B.
$100
C.
$105.33
D.
$1,580
Explanation:
Oracle Fusion Receivables uses the active interest tier and charge schedule values to calculate late
charges using the Simple calculation formula.
The Simple calculation formula is the amount overdue multiplied by the rate and days overdue in the
period:
Amount Overdue * (Interest Rate/100) * (Number of Days Late/Number of Days in Period)
Here: 1500* 0.2 * (10/30)=100
Example:
This table provides an example of a charge schedule with four interest tier periods, each with an
assigned interest rate.
Days Overdue Tiers
Interest Rate
1-30 days
2%
31-45 days
3%46-60 days
4%
Over 60 days
5%
In this example:
An invoice for $1,000 is 45 days overdue.
There are 30 days in the billing period.
The late charges are calculated as follows:
$1,000 * (3/100) * (45/30) = $45
After an additional 15 days (60 days overdue), the late charges are calculated as follows:
$1,000 * (4/100) * (60/30) = $80
Fusion Applications help, Reference: Fusion Applications help,
Correct answer : A
Go through the below link:
https://docs.oracle.com/cd/E37583_01/doc.1116/e22896/F455009AN181AF.htm
Late Charge Interest Calculation Formulas: Explained
When you set up a late charge profile for your customers, you must decide the formula to use to calculate late charges.
Interest Calculation Formulas
You select the calculation formula in the Interest Calculation Formula field in the Charge Calculation Setup region in the Credit Limits and Late Charges tab of the Customer Profile Class pages, or on the applicable customer or customer site profile.
The interest calculation formulas are:
Flat Rate: Use a flat rate to calculate the late charge amount. Receivables ignores the number of days that a payment is overdue. If you use balance forward billing and the average daily balance calculation method, then this is the calculation formula used. The formula is:
Amount Overdue * (Interest Rate/100)
Simple: Calculate late charges on overdue transactions only. If you use interest tiers and charge schedules to create late charges and penalties, then this is the calculation formula used. The formula is:
Amount Overdue * (Interest Rate/100) * (Number of Days Late/Number of Days in Period)
Compound: Calculate late charges on the sum of overdue transactions and prior late charges. The formula is:
(Amount Overdue + Prior Late Charges) * (Interest Rate/100) * (Number of Days Late/Number of Days in Period)