Compute the increase in contribution margin

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Question - Receivables: Credit Terms: ABC sold boxes of candles at P1,000 each. For each box, ABC incurs variable cost of P750. Daily sales total 500 boxes over its 250-work day year. All sales are on credit. For the coming year, it plans to accept customers who have less desirable credit ratings. Sales are expected to increase by 10%. Average collection period will increase from 40 days to 50 days. Bad debts will increase from 1% to 3%% of sales. Fixed expenses will stay the same. For profitability analysis, ABC uses an 8% effective interest rate. If ABC proceeds with its plan to accept the new market group, compute the increase in contribution margin.

Reference no: EM133113532

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