Question
73 Current credit policy Proposed credit policy Cash price $48.00 $48.00 Credit price n/a $50.00 Variable cost $36.00 $36.00 Quantity 120 120 Monthly return 2.00%
73
| Current credit policy | Proposed credit policy | |
| Cash price | $48.00 | $48.00 |
| Credit price | n/a | $50.00 |
| Variable cost | $36.00 | $36.00 |
| Quantity | 120 | 120 |
| Monthly return | 2.00% | 2.00% |
| Credit terms | n/a | Net 30 |
| % Uncollectable | n/a | 3.00% |
Assume the customer will either pay in 30 days or will default. What is the cost of switching the credit policy?
Multiple Choice
-
$4,320
-
$5,000
-
$5,333
-
$5,760
-
$6,000
74.
| Current credit policy | Proposed credit policy | |
| Price | $50 | $50 |
| Variable cost | $35 | $35 |
| Quantity | 850 | 885 |
| Monthly return | 1.0% | 1.0% |
| Credit terms | n/a | net 30 |
What is the incremental cash flow per year from switching credit policies?
Multiple Choice
-
$415
-
$475
-
$525
-
$1,225
-
$1,750
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The Basics Of Finance Financial Tools For Non Financial Managers
Authors: Bryan E. Milling
1st Edition
0942061187, 9780942061185
