Use the following information on Black Red to answer questions 14 18.

JDL is considering whether to discontinue offering credit to customers who currently have late payments on the credit extended to them. Current annual credit sales are $10 million and such a change in policy is expected to reduce sales by 15 percent, cut the firms bad-debt losses from 8 to 4 percent, and reduce average collection period from 70 days to 45 days. The firms variable cost ratio is 0.80 and its required pretax return on receivables and inventory investments is 25 percent. Because of the anticipated decrease in sales, the company expects its inventories to decrease by $200,000.

Determine the lost profit contribution due to this credit-tightening policy (because sales have decreased).

Determine the benefit of less investment in accounts receivable.

Determine the benefit of less bad-debt loss.

Determine the benefit of less investment in inventory.

Determine the net change in pretax profits due to this policy tightening.