Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net $90$ days while industry$-$wide credit terms have recently been lowered to net $30$ days. On annual credit sales of $$2\mathrm{.}54$ million, Vinson currently averages $95$ days of sales in accounts receivable. Mitchell estimates that tightening the credit terms to $30$ days would reduce annual sales to $$2,415,000,$ but accounts receivable would drop to $35$ days of sales and the savings on investment in them should more than overcome any loss in profit. Vinson$$s variable cost ratio is $71\%,$ taxes are $40\%,$ and the interest rate on funds invested in receivables is $15\%.$ Assuming a $365-$day year, calculate the cost of carrying receivables under the current policy and the new policy. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.

Current policy: $

New policy: $

Should the change in credit terms be made? The Boyd Corporation has annual credit sales of $$1\mathrm{.}91$ million. Current expenses for the collection department are $$34,000,$ bad$-$debt losses are $1\mathrm{.}5\%,$ and the days sales outstanding is $30$ days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $$30,000$ per year. The change is expected to increase bad$-$debt losses to $2\mathrm{.}5\%$ and to increase the days sales outstanding to $45$ days. In addition, sales are expected to increase to $$1,935,000$ per year. Suppose that the opportunity cost of funds is $17\%,$ the variable cost ratio is $64\%,$ and taxes are $40\%.$ Assuming a $365-$day year, calculate the cost of carrying receivables under the current policy and the new policy. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.

Current policy: $

New policy: $

Should the firm relax collection efforts?