Moorcroft Companys budgeted sales and direct materials purchases are as follows:

		Budgeted Sales		Budgeted D.M. Purchases
April		$301,000		$47,000
May		301,000		49,000
June		397,000		62,000

Moorcrofts sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcrofts purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.

Moorcrofts assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible. Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections?

Moorcroft Company Schedule of Expected Collections from Customers
		Sales		April		May		June
April		$		$		$		$
May
June
Total Collections				$		$		$

Would it be worth paying the collector $1,000 per month?

It (would be )(would not be) worth paying the collector $1,000 per month to improve the cash collections of the company.