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The Dream Corp has annual credit sales of $2 million. Current expenses for the collection department are $40,000, bad-debt losses are 1.0%, and the days

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The Dream Corp has annual credit sales of $2 million. Current expenses for the collection department are $40,000, bad-debt losses are 1.0%, and the days sales outstanding is 29 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $30,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days sales outstanding to 45 day In addition, sales are expected to increase to $2.1 million per year. Should the firm relax collection efforts if the opportunity cost of funds is 12%, the variable cost ratio is 80%, and taxes are 25%

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