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What is the change in gross profit associated with proposal

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Reference no: EM132547907

Nati- Company is evaluating a relaxation of its credit policy .At present, 70% of sales are on credit and there is no a gross margin of 20% . Additional data are:

Current Anticipated

Sales $500,000 $640,000

Credit sales $410,000 $520,000

Collection expenses 3% of credit sales 4%of credit

Sales

Collection period 72 days 90 day

Require: Using 360 days in a year, answer the following:-

Question a) What is the change in gross profit associated with the proposal?

Question b) What is the incremental change in collection expense ?

Question c) What is the change in average account receivable?

Reference no: EM132547907

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