ABC Corporations annual sales amounts to Php8,960,000, 80% of which us credit sales. The variable cost ratio is 75%. A proposal was made to relax the credit standards. The relaxation in credit standards would increase total credit sales by 10%. The collection period for the incremental sales would be 30 days. The payment behaviour of the existing customers will not change.

The variable cost ratio, even for the incremental sales, will be the same as in the past. The cost of borrowing is estimated at 25% per year. The company uses 360 days in a year in all its computations.

Required: 1. What is the expected benefit (loss) from the planned relaxation in credit policy?