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Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $160,000 if credit is extended to these
Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $160,000 if credit is extended to these new customers. Of the new accounts receivable generated, 10 percent will prove to be uncollectible. Additional collection costs will be 3 percent of sales, and production and selling costs will be 75 percent of sales. What is the cost of uncollectible sales? What is the collection costs of the company? What are the production and selling costs? INDEPENDENT REQUIREMENT/IGNORE INFORMATION PROVIDED ABOVE What is the incremental return on sales? Assume that the incremental sales are $200,000 and the incremental income is $10,000
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