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Should they adopt the new policy

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Question - S manufacturing produces 9000 units a year for variable costs of $80 and fixed costs of $4 per unit. The units are then sold for $140. All on credits, the owners know they have the capacity to produce 9500 units a year and believe if they adopt a new credit policy. Sales will increase to 9500 units a year however the average collection period of accounts receivable will increase from 30 to 40 days. If S manufacturing has a required rate of return of 19%, should they adopt the new policy?

Reference no: EM133182498

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