Accounts receivable changes with bad debts A firm is evaluating an accounts receivable change that would increase bad debts from $2\%$ to $4\%$ of sales. Sales are currently $40,000$ units per month, the selling price is $$20$ per unit, and the variable cost per unit is $$15.$ As a result of the proposed change, sales are forecast to increase to $70,000$ units per month. If the cost of capital is $0\mathrm{.}75\%$ per month, should the firm change its credit policy?

The cost of the marginal bad debts of the firm is $ $($Round to the nearest dollar.$)$

The profit contribution from an increase in sales is $ $q,($Round to the nearest dollar.$)$

Considering all changes in costs and benefits, would you recommend the proposed change?

Fill in the blank

$($Yes$/$No$)$ since the cost of marginal bad debts is $($less$/$greater$)$ than the profit from increased sales