National Co. believes that its collection costs could be reduced through modication of collection procedures. This action is expected to result in a lengthening of the average collection period from 3D to 40 days; however, there will be no change in uncollectible accounts. or in total credit sales. Furthermore, the 1liariable cost ratio is 55%, the opportunity cost of a longer collection period is assumed to be negligible, the company's budgeted credit sales for the coming year are P45,U,, and the required rate of return is 5%. To justify changes in collection procedures, the minimum annual reduction of costs {using a 360day year and ignoring taxes} must be * Ill Format \".111