ittle Runabout Inc. makes small trailers for light-duty towing behind SUVs and small pickup trucks. Its trailers typically sell for $2,500. Many of its customers have asked for credit terms to aid in purchasing the trailers. The firm's finance department has estimated the following profile for its light-duty trailers and customer base:

Annual sales:

12,000 trailers

Annual production costs per trailer:

$1,500

Lost sales if credit is not provided for customers:

2,000 trailers

Default rate if all customers purchase on credit:

3.00%

What is the dollar value of bad debts the firm expects to accumulate over a year? Given this amount, what is the maximum average amount per unit sold that the firm should spend on credit screening?

		$450,000; $37.50
		$450,000; $45.00
		$4,500,000; $450.00
		$4,500,000; $$562.50