Your firm currently makes only cash sales. You estimate that allowing trade credit on terms of...
Your firm currently makes only cash sales. You estimate that allowing trade credit on terms of net 30 would increase monthly sales from 200 to 220 units per month. The price per unit is $101 and the cost (in present value terms) is $80. The interest rate is 1% per month. If the probability of payment is no better than 0.8, what is the expected profit of granting credit? How does the repeat sale affect your credit decision?
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Your firm currently makes only cash sales. You estimate that
allowing trade credit on terms of...
Initiating a cash discount Gardner Company currently makes all sales on credit and offers no cash discount. The firm is...
Initiating a cash discount Gardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 4% cash discount for payment within 15 days. The firm's current average collection period is 60 days, sales are 40,000 units, selling price is $48 per unit, and variable cost per unit is $30. The firm expects that the change in credit terms will result in an increase in sales to 41,000 units, that 70% of the...
29. (a) Your supplier grants you credit terms of 2/10, net 35. What is the effective...
29. (a) Your supplier grants you credit terms of 2/10, net 35. What is the effective annual cost of the discount if you purchase $100 worth of merchandise? (b) Your firm currently sells 215 units a month at a price of $90 a unit. You think you can increase your sales by an additional 45 units if you switch to a net 30 credit policy. (1) The monthly interest rate is .5 percent and your variable cost per unit is...
Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $70, and the cost pe...
Microbiotics currently sells all of its frozen dinners cash on
delivery but believes it can increase sales by offering
supermarkets 1 month of free credit. The price per carton is $70,
and the cost per carton is $50. The unit sales will increase from
1,020 cartons to 1,080 per month if credit is granted. Assume all
customers pay their bills and take full advantage of any credit
period offered.
a. If the interest rate is 1% per month, what
will...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November December Cash sales $ 115,000 $ 95,000 $ 95,000 Credit sales 115,000 114,000 104,500 Total $ 230,000 $ 209,000 $ 199,500 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November December Cash sales $ 155,000 $ 127,000 $ 111,000 Credit sales 155,000 152,400 122,100 Total $ 310,000 $ 279,400 $ 233,100 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November December Cash sales $ 150,000 $ 123,000 $ 109,000 Credit sales 150,000 147,600 119,900 Total $ 300,000 $ 270,600 $ 228,900 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November December Cash sales $ 140,000 $ 115,000 $ 105,000 Credit sales 140,000 138,000 115,500 Total $ 280,000 $ 253,000 $ 220,500 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are...
Timpco, a retailer, makes both cash and credit sales (ie, sales on open account). Information regarding...
Timpco, a retailer, makes both cash and credit sales (ie, sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: Cash sales Credit sales Total October $ 100,00 160,000 5 200.000 November $ 120.000 150,000 $ 270, eee December $ 80,000 90,000 $ 170,000 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40%...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: Cash sales Credit sales Total October $ 120,000 120,000 $ 240,000 November $ 99,000 118,800 $ 217,800 December $ 97,000 1 06,700 $ 203,700 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40%...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November $ 95,000 114,000 209,000 December $ 95,000 104,500 Cash sales 115,000 115,000 230,000 Credit sales 199,500 Total Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month...
Initiating a cash discount Gardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 4% cash discount for payment within 15 days. The firm's current average collection period is 60 days, sales are 40,000 units, selling price is $48 per unit, and variable cost per unit is $30. The firm expects that the change in credit terms will result in an increase in sales to 41,000 units, that 70% of the...
29. (a) Your supplier grants you credit terms of 2/10, net 35. What is the effective annual cost of the discount if you purchase $100 worth of merchandise? (b) Your firm currently sells 215 units a month at a price of $90 a unit. You think you can increase your sales by an additional 45 units if you switch to a net 30 credit policy. (1) The monthly interest rate is .5 percent and your variable cost per unit is...
Microbiotics currently sells all of its frozen dinners cash on
delivery but believes it can increase sales by offering
supermarkets 1 month of free credit. The price per carton is $70,
and the cost per carton is $50. The unit sales will increase from
1,020 cartons to 1,080 per month if credit is granted. Assume all
customers pay their bills and take full advantage of any credit
period offered.
a. If the interest rate is 1% per month, what
will...
Timpco, a retailer, makes both cash and credit sales (ie, sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: Cash sales Credit sales Total October $ 100,00 160,000 5 200.000 November $ 120.000 150,000 $ 270, eee December $ 80,000 90,000 $ 170,000 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40%...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: Cash sales Credit sales Total October $ 120,000 120,000 $ 240,000 November $ 99,000 118,800 $ 217,800 December $ 97,000 1 06,700 $ 203,700 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40%...
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November $ 95,000 114,000 209,000 December $ 95,000 104,500 Cash sales 115,000 115,000 230,000 Credit sales 199,500 Total Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month...
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