3 Answer the following questions based on the information below Current credit policy(n/a) Proposed credit policy (net 30) Price (RO) 15 15 Variable cost per unit (RO) 10 11 Quantity 100,000 140,000 Monthly rate 1.20% a. What is the incremental cash flows from switching credit policies? (2 pts) b. What is the cost of switching? (2 pt) What is your recommendation? (2 pt) d. What is the break-even sales increase? Interpret. (2 pts) 5. Kamal Co. has an average collection period (ACP) of 30 days and an operating cycle of 170 days. It has a policy of keeping at least RO 15,000 on hand as a minimum cash balance, and has a beginning cash balance for the first quarter of RO 20,000 Beginning receivables for the first quarter amount to RO 30,000. Sales for the first second and the third quarters are expected respectively to be RO 100,000; RO120,000; and RO 150,000. The purchases amount represents 50% of the next quarter's forecasted sales. The quarterly wages and other expenses is RO 7,000. The capital expenditure occurs in the second quarter and equals to RO 15,000. The accounts payable period is 45 days. The beginning accounts payable is RO 10,000. a. What are cash collections in the first and second quarters? (2 pts) QU 02 Beginning Receivables Sales Cash collections Ending receivables b. What are cash disbursements for the first and second quarters? (2 pts) Q1 02 Payment of amounts Wages and other expenses Capital expenditures Total cash disbursements c What is the cumulative surplus (deficit) at the end of the first and second quarters? (2 pts) 01 Q2 Total cash collections 3 Answer the following questions based on the information below Current credit policy(n/a) Proposed credit policy (net 30) Price (RO) 15 15 Variable cost per unit (RO) 10 11 Quantity 100,000 140,000 Monthly rate 1.20% a. What is the incremental cash flows from switching credit policies? (2 pts) b. What is the cost of switching? (2 pt) What is your recommendation? (2 pt) d. What is the break-even sales increase? Interpret. (2 pts) 5. Kamal Co. has an average collection period (ACP) of 30 days and an operating cycle of 170 days. It has a policy of keeping at least RO 15,000 on hand as a minimum cash balance, and has a beginning cash balance for the first quarter of RO 20,000 Beginning receivables for the first quarter amount to RO 30,000. Sales for the first second and the third quarters are expected respectively to be RO 100,000; RO120,000; and RO 150,000. The purchases amount represents 50% of the next quarter's forecasted sales. The quarterly wages and other expenses is RO 7,000. The capital expenditure occurs in the second quarter and equals to RO 15,000. The accounts payable period is 45 days. The beginning accounts payable is RO 10,000. a. What are cash collections in the first and second quarters? (2 pts) QU 02 Beginning Receivables Sales Cash collections Ending receivables b. What are cash disbursements for the first and second quarters? (2 pts) Q1 02 Payment of amounts Wages and other expenses Capital expenditures Total cash disbursements c What is the cumulative surplus (deficit) at the end of the first and second quarters? (2 pts) 01 Q2 Total cash collections