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The Boyd Corporation has annual credit sales of $ 2 . 5 4 million. Current expenses for the collection department are $ 3 3 ,
The Boyd Corporation has annual credit sales of $ million. Current expenses for the collection department are $ baddebt losses are and the days sales outstanding is days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $ per year. The change is expected to increase baddebt losses to and to increase the days sales outstanding to days. In addition, sales are expected to increase to $ per year. Suppose that the opportunity cost of funds is the variable cost ratio is and taxes are Assuming a day year, calculate the cost of carrying receivables under the current policy and the new policy. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
Current policy: $
New policy: $
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