Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

9. Easy limited specializes in the manufacture of a wireless computer keyboard. The component is currently sold for Rs. 1000 and its variable cost

image text in transcribed 

9. Easy limited specializes in the manufacture of a wireless computer keyboard. The component is currently sold for Rs. 1000 and its variable cost is Rs. 800. For the current year ended December 31, 2019, the company sold an average 400 components per month. At present, the company grants one month's credit to its customers. It is thinking of extending the same to two months on account of which the following are expected: Increase in sales, 25 per cent Increase in stock, Rs. 200000 Increase in creditors, Rs. 100000 You are required to advise the company on whether or not to extend credit terms if (a) all customers avail of the extended credit period of two months and (b) existing customers do not avail of the credit terms but only the new customers avail of the same. The company expects a minimum return of 40 per cent on the investments.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Creating Value in a Dynamic Business Environment

Authors: Ronald W. Hilton

11th edition

125956956X, 978-1259569562

More Books

Students also viewed these Accounting questions

Question

Explain the advantage of a bullet loan.

Answered: 1 week ago

Question

=+d. What price of com was needed to cover operating costs?

Answered: 1 week ago