a. Caiculate the increase in current assets and the cests to finance that increase. (enter all numbern as whole numbers) b. Calculate the impact of changing the credit policy on contribution margin: c. Calculate the net impact of changing the credit policy: d Would you offer the now credit terms? (Yes/No) The company is considering offering new credit terms of net 60 days to all customers to drive sales, They believe the competitve advantage of this new policy would allow Canadian Drums inc to increase the solling price of their product by \\( \\$ 15.00 \\) per unit and increase sales by 180 units per year. Variable costs are expected to remain at \\( \\$ 90 \\) per unit and bad debt expense will be 10 percent of total sales per year, (Note the wording here. Total Contributicn Margin will go up for two roasons, First, there wal be a price increase on the existing 2,500 drum sets being sold, Second, there will be an additional 180 drum sets sold at the new price. Perform your analysis on toetal sales and total contribution margin, not just the change in sales volume.) South American Drums inc expects all customers will take advantage of the new terms (i.e., they will all pay Apcllo inc 60 days after a sale is recorded). So, for the first time in the company's history they wit have an accounts recelvablo balance in current assets and a bad-debt expense. The increase in sales will also mean an increase in the inventory they hold. Inventory is curtenty sitting at \\( \\$ 480,000 \\) and is expected to increase by 25 . 0 percent. The firm will finance the additional investment in working capital by using a line of credit (bank loan) which charges 12.0 percent interest per year: Required: a. Calculate the increase in current assets and the costs to finance that increase: b. Calculate the impact of changing the credit policy on contribution margin: c. Calculate the net impact of changing the credit policy: d. Would you offer the new credit terms? (Yes/No) USA Last year the company sold 2,500 drum sets at a price of \\( \\$ 150.00 \\) per drum set The company is considering oflering new credit terms of net 60 days to all customen to deive sales. They beliove the competitive advantage of this new policy would allow Canadian Drums ino to increase the selling price of their product by \\( \\$ 15.00 \\) per unit and increase sales by 180 units per year. Variable conts are expected to remain at 590 per unit and bad debt expense wat be 10 percent of total soles per year. (Note the wording here. Total Contribution. Margin wal go up for two reasons. Fins, there wil be a price increaso on tho existing 2,500 drum sots being sold. Second, there will be an adiditional 180 drum sets sold at the new price. Pertorm your analyals on total sales and total contribution margin, not just the change in saies volume.) Sough American Drums inc expects all custorners mil take advantage of the new terms (L. . they wall all pay Apollo inc 60 days after a sale is tecorded), So, for the first time in the company's history they will have an acoounts recewable balance in current assets and a bad-debt expense. The incresse in sales wil also mean an increase in the inventory they hold. Inventory is currontly sitting at \\( \\$ 480,000 \\) and is expected to increase by 25.0 vercent. The fim will france the additional irvestment in working capital by using a line of credit (bank loan) which charges 12.0 porcent interest per yoar
