Discount Policy and Net Sales Reported Park Electronics sells cell phones. During 2018, Park sold 1,500 units at an average of \(\$ 500\) per unit. Each unit cost Park \(\$ 350\). At present, Park offers no sales discounts. Park's controller suggests that a generous sales discount policy would increase annual sales to 2,000 units and also improve cash flow. She proposes \(3 / 15, \mathrm{n} / 20\) and believes that \(75 \%\) of the customers would take advantage of the discount.

Required:

1. If the controller is correct, determine how much the new sales discount policy would add to net sales and gross margin.

2. CONCEPTUAL CONNECTION Explain why the sales discount policy might improve cash flow.

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