What is the additional profit contribution

Reference no: EM13266363

Forrestor Fashions as annual credit sales of 200,000 units with an average collection period 66 days. The company has a per-unit variable cost of $24 and a per-unit sale price of $36.0 Bad debuts currently are 4% of slaes. The firm estimates that a proposed relaxtion of credit standards would not affect its 66-day average collection period but would increase bad debts to 6.00% of sales, which would increase to 240,000 units per year. Forrester requires a 16% return on investments. Show all necessary calculations required to evaluate Forrestor's proposed relaxtion of credit standards. What is the additional profit contribution from an increase in sales?

Reference no: EM13266363

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