Accounts receivable changes without bad debts Clear Glass Company sells glass

containers. It reported total sales of $1,580,000, with 60% of the sales on credit. It

takes 60 days to collect accounts receivable. The selling price is $20 per container

while the variable cost is $15 per container. The board is currently investigating a

change in the collection of accounts receivable that is expected to result in a 20% increase

in credit sales and a 10% increase in the average collection period. No change

in bad debt is expected. The firm's opportunity cost on its investment in accounts receivable

is 12%. (Note: Use a 365-day year.)

a. Calculate the additional profit contribution from sales if the change in collecting

accounts receivable is implemented.

b. Calculate the marginal investment in accounts receivable that will result from the

change.

c. Calculate the cost of the marginal investment in accounts receivable.

d. Would you recommend the firm implement the proposed change?