VERY URGENT

Qaesiica Three Rogers LH is considering relaxing its credit standards. The fira's current crerit cus is net 30 but the average debis collection period is 45 days. Current annual credii sales amounts to Sh.12,000.000. The firm wants to extend credit period nel 75. Sales are expected to increase by 25%. Bad debts will increase from 2% io 3.5% of annual credit sales. Credit analysis and debt collection costs will increase by Sh8,000 p.a. The return on investment in debtors is 12% for Sh.100 of sales, and the variable costs 75. Ascune 360 days p.a. Should the firm change the credit policy? (8 ma ABC Lid requires 4,000 units of a component in its manufacturing process in the coming year which costs Sh.50 each The items are available locally and the lead time in one week. Each order costs Sh.100 to prepare and process while the boiding cost is Shs. 15 per unit per year for storage plus 10% opportunity cost of capitel. Kequired i. How many units should be ordered each time an order is placed to minirnize inveniory costs? (2 mna i downery orders will be placed per year? 111. Determine the total relevant costs. (2 ma (2 ma