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Question 1 1 ( 3 points ) Tobin Fisheries currently sells to its customers on terms of 3 1 0 , net 3 0 .

Question 11(3 points)
Tobin Fisheries currently sells to its customers on terms of 310, net 30. Its average collection period
is 20 days, with 80 percent currently taking up the discount. All sales are credit sales. Upper
management has expressed concern about sluggish sales, and the marketing department would like a
more attractive credit package. Next year's sales are projected to be $2.19 million. It has been
estimated that with terms of 415, net 45, sales next year would jump to $2.92 million and 65 percent
of sales would take the discount, but the average collection period would increase to 42 days. Tobin's
contribution margin of 6 percent would hold with the expansion of sales, as would its short-term
financing cost of 10 percent.
Q11: Accounts receivable from the existing policy (i.e.310 net 30) are:
$90,000
$18,000
$120,000
$72,000
$21,600
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