Golden Syntax has annual sales of Rs. 24 lakhs. The selling price per unit is Rs. 10 and variable cost is 70% of the selling price. The required rate of return on investment is 20%, average cost = Rs. 9 per unit, annual collection expenditure is Rs. 50,000 and percentage of default is 3%, credit terms 2 months. Golden syntax is considering the change in credit policy by following programme A or programme B.

Prog A

Prog B

Average collection period

1.5

1

Annual collection expenses

75,000

1,50,000

Percentage of default

2%

1%

Determine which collection programme should be followed by the company.