Question

To perform this activity, refer to the tables in the JustLee Books database.

Currently, JustLee Books bills customers for orders by enclosing an invoice with each order when it’s shipped. A customer then has 10 days to send in the payment. Of course, this practice has resulted in the company having to list some debts as "uncollectible." By contrast, most other online booksellers receive payment through a customer’s credit card at the time of purchase. With this method, although payment would be deposited within 24 hours into JustLee’s bank account, there’s a downside. When a merchant accepts credit cards for payment, the company processing the credit card sales (usually called a "credit card clearinghouse") deducts a 1.5% processing fee from the total amount of the credit card sale.

The management of JustLee Books is trying to determine whether the surcharge for credit card processing is more than the amount usually deemed uncollectible when customers are sent an invoice. Historically, the average amount that JustLee Books has lost is about 4% of the total amount due from orders with a higher-than-average amount due. In other words, usually customers who have an order with a larger-than-average invoice total default on payments. To determine how much money would be lost or gained by accepting credit card payments, management has requested that you do the following:

Determine how much the surcharge would be for all recently placed orders if payment had been made by a credit card.

Determine the total amount that can be expected to be written off as uncollectible based on recently placed orders with an invoice total more than the average of all recently placed orders.

Based on the results of these two calculations, you should determine whether the company will lose money by accepting payments via credit card. State your findings in a memo to management. Include the SQL statements for calculating the expected surcharge and the expected amount of uncollectible payments.

Options:
A. 1. $ surcharge = Total credit card sales x 1.5%

Expected uncollectible amount = Average order total x 4%
B. 1. $ surcharge = Total credit card sales x 1.5%
Expected uncollectible amount = Total credit card sales x 4%
C. 1. $ surcharge = Total order sales x 1.5%
Expected uncollectible amount = Average order total x 4%
D. 1. $ surcharge = Average order total x 1.5%
Expected uncollectible amount = Total order sales x 4%

Answer 1

The correct SQL statements for calculating the expected surcharge and the expected amount of uncollectible payments are provided. By comparing these amounts, you can determine if the company will lose money by accepting credit card payments.

Expected uncollectible amount = Average order total x 4%

To determine whether the company will lose money by accepting payments via credit card, you need to compare the amount of the expected surcharge with the amount of the expected uncollectible payments. If the expected surcharge is greater than the expected uncollectible amount, then the company will lose money by accepting credit card payments.