Reference no: EM132015856

1. Calculate the accounts receivable period for a firm with an annual sales of $10 million and average accounts receivable of $2 million.

2. A company currently has an inventory item that is vital to its production process and costs $2,675. The company uses 1538 units of the item per year and order costs are $125 per order. If the carry costs are $136 per unit what is the EOQ?

3. A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $2.11 million. Costs of goods sold represent 48 percent of sales and the average collection period is expected to increase from 40 to 53 days. If the firm requires a return of 13.3 percent, what the cost of investing in the extra accounts receivables from the planned relaxation of credit standards?