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Trying to decide whether to change their credit policy from all cash to net 30. Sells 10,000 cupcakes at a price of $6. The variable
Trying to decide whether to change their credit policy from all cash to net 30. Sells 10,000 cupcakes at a price of $6. The variable cost of making cupcakes is $3 and the monthly fixed cost is $5,000. If the company changes to a net 30 credit policy it will sell 500 more cupcakes. Monthly required return is 2%. What is the break-even level of sales beyond which the firm should switch to the net 30 policy?
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