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Snack Factory may switch from a cash only policy to a net 60 policy. The price per unit of chip bags is $500 and the
Snack Factory may switch from a cash only policy to a net 60 policy. The price per unit of chip bags is $500 and the variable cost per unit is $200. The company currently sells 500 units per month. Under the proposed policy, the company will sell 600 units per month.
What are the cash flows related to the switch and should the company offer credit terms of net 60? why or why not
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