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Advise whether the proposed credit policy should implemented

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Reference no: EM132726158

A company has prepared the following projections for a year :

Sales 21000 units

Selling price per unit Rs. 40.00

Variable costs per unit Rs. 25.00

Total costs per unit Rs. 35.00

Credit period allowed one month

Problem 1: The company proposes to increase the credit period allowed to its customers from one month to two months. It is envisaged that the change in policy as above will increase the sales by 8%. The company desires a return of 25 % on its investment. You are required to examine and advise whether the proposed credit policy should be implemented or not.

Reference no: EM132726158

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