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How much is the net benefit of relaxing the company

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Reference no: EM132593882

Company ABC would like to relax its credit selection and standards which would result to the following:

 

Present System

Proposed System

Units to be sold for the year

60,000

63.000

Selling price per unit

P 10

P 10

Variable cost per unit

P6

P6

Fixed cost

P100,000

P100,000

Average collection period

30 days

45 days

Bad debts percentage based on net sales

I%

2%

Required rate of return

15%

15%

Question 1: How much is the net benefit of relaxing the company's credit selection and standards?

Reference no: EM132593882

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