7

As treasurer of the Universal Bed Corporation. Arlstotle Procrustes is worrled about his bad debt ratio, which is currently running at 5.9%. He belleves that imposing a more stringent credit pollcy might reduce sales by 5% and reduce the bad debt ratlo to 3.9%. Assume current sales are $100 a. If the cost of goods sold is 81% of the selling pice. what is the expected profit on the current credit pollcy? Note: Do not round Intermeclate calculatlons. Round your answer to 2 decimal places. b. If the cost of goods sold is 81% of the selling pince, what is the expected profit on the more stringent credit pollcy? Note: Do not round Intermedlate calculatlons. Round your answer to 2 declmal places. c. Should Mr. Procrustes adopt the more stringent pollcy? \begin{tabular}{|l} \hline a. Expected profit \\ \hline b. Expected profit \\ \hline c. Should Mr. Procrustes adopt the more stringent polioy? \end{tabular}