Landis Apparel Company, located in British Columbia, did slightly over $100 million in sales. Ruth Landis and her husband, Jim, started the women clothiers company two decades ago and has watched it grow from five employees to over 500. Ruth was the CEO and Jim was the chief financial officer. Landis produces its own brand of dresses, sweaters, and other apparel, and also sold brands licensed by Tommy Hilfiger, Givenchy, Michael Kors, and others. Landis dress manufacturing plants are located in British Columbia, South America, and Asia. Among the many hundreds of decisions Ruth and Jim Landis make is, what customers are acceptable for credit extension. In the retail fashion business, virtually no customer pays cash, so the extension of credit to retailers is critical in doing business. A potential account has been brought to their attention by the credit department. On routine decisions, the credit department determines what new customer accounts are acceptable, but on more involved situations, the final call rested at the top with Ruth and Jim Landis. The account under consideration was Monique Fashion Stores. They are asking for $1 million for credit purchases. Based on Moniques Dun & Bradstreet rating and other industry data, there appears to be a five percent probability of non-payment if credit were extended. The collection costs to service the account are four percent of sales and the production and selling costs are 85 percent of sales. Any profits would be taxed at a 35 percent rate. Ruth and Jim determined that accounts receivable turnover would be three times. Additional inventory must be maintained throughout the year to support the increase in sales. The average inventory carried by Logan is based on a determination of an EOQ. Assume unit sales of clothing will increase from 125,000 to 126,250 units. The ordering cost for each order is $200 and the carrying cost per unit is $1.50. Each unit in inventory has an average cost of $800.00. The firm has a required return on investment of 14 percent. Required 1. Using Excel, determine EOQ before and after the increase in inventory levels. 2. Calculate the average inventory before and after the increase in sales. 3. Use a technique similar to that in An Actual Credit Decision on page 232 and 233 of your textbook, determine the Annual Incremental Income after Taxes, from making the sale to Monique Fashion Stores. Assume the only new investment would be in accounts receivable and inventory