Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
M/s ABC's present credit terms are 1/10 net 30 that they are planning to change to 2/10 net 30. The current average collection period is 20 days and the variable cost to sales ratio is 85 and the cost of capital is 10%. The proportion of sales on that customers now take discount is .5. After relaxation of discount terms this is assumed that the ACP will decrease to 14 days, sales will rise from Rs.80 lakhs to Rs 85 lakhs and the proportion of discount sales will rise to .8. Tax rate for the firm is 40% compute the effect of above modifications on net profit.
Solution:
? I = (ACPn - ACP0) [S0/360] + V(ACPn)( ?S/360)
? I = 80/360 (20 - 14) - .85 × 5/360 × 14
= 1.1680555 lakhs
? DIS = Pn (S0+ ? S) dn - P0S0d0
= .96 lakhs
? NP = ? S (1 - v) - ? DIS] (1 - t) + k ?I
= [5 (1 - .85) - .96] (1 - .4) + .1 ×1.1680555
= (.75 - .96) (.6) + .116805555
= - .126 + .11680555
= - .009194 lakhs
As the increase in net profit is negative the cash discount policy must not be liberalized.
Pricing decision Price may be defined as the exchange of goods or services in terms of money. Without price firm can survive in the society. If money is not there exchange of g
Ask question #MRead ALL instructions before getting started! ABC Corporation is a new company that buys and sells office supplies. Business began on January 1, 2014. Given on th
What is kaizen Kaizen is the Japanese term for continuous improvement. The kaizen concept was pioneered by in Japan by Toyota as daily challenge to all its to improve their pro
Directing There are number of good plans which are never realized. To realize a plan it requires the initiation and direction of the number of actions. Often, thes
Coleman, a married taxpayer, is going to establish a manufacturing business. He anticipates that the business will be profitable immediately due to a patent he holds. He predicts t
Standard costing system However, it has been argued that traditional variance analysis is unhelpful and potentially misleading in the modern organization, and can make managers
Advantages of activity based costing 1) It helps understanding the behavior of overhead costs and their relations ship to products services customers and market segments. 2)
Variances Analysis Variances are the differences between actual results and expected results. Expected results are the standard costs and standard revenues. Price, rate and
Working Capital management is affected through two characteristics of current assets that are as follows (i) short life span (ii) swift transformation in the other asset forms.
Battle of the Sexes game To understand Battle of the Sexes game, let’s consider a story as follows: Two players (a couple) wish to go to an event together but disagree about
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd