Credit screening. Tennindo, Inc. is starting up its new, cost-efficient gaming system console, the yuu. Tennindo currently has 4,500 cash-paying customers and makes a profit of $70 per unit. Tennindo wants to expand its customer base by allowing customers to buy on credit. It estimates that credit sales will bring in an additional 1,400 customers per year, but that there will also be a default rate on credit sales of 5%. It costs $220 to make a yuu, which retails for $290. If all customers (old and new) buy on credit, what is the cost of bad debt without credit screening? What is the most Tennindo would pay for credit screening that accurately identifies bad-debt customers prior to the sale? What are the increased profits from adding credit sales for customers with and without credit screening? Should Tennindo offer credit sales if credit screening costs $10 per customer? If all customers (old and new) buy on credit, what is the cost of bad debt without credit screening? (Round to the nearest dollar.)
Credit screening. Tennindo, Inc. is starting up its new, cost-efficient gaming system console, the yuu. Tennindo currently has 4,500 cash-paying customers and makes a profit of $70 per unit. Tennindo wants to expand its customer base by allowing customers to buy on credit. It estimates that credit sales will bring in an additional 1,400 customers per year, but that there will also be a default rate on credit sales of 5%. It costs $220 to make a yuu, which retails for $290. If all customers (old and new) buy on credit, what is the cost of bad debt without credit screening? What is the most Tennindo would pay for credit screening that accurately identifies bad-debt customers prior to the sale? What are the increased profits from adding credit sales for customers with and without credit screening? Should Tennindo offer credit sales if credit screening costs $10 per customer? If all customers (old and new) buy on credit, what is the cost of bad debt without credit screening? (Round to the nearest dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Credit
bad debt without credit screening? What is the most Tennindo would pay for credit screening that accurately identifies bad-debt customers prior to the sale? What are the increased profits from adding credit sales for customers with and without credit screening? Should Tennindo offer credit sales if credit screening costs
screening.
Tennindo, Inc. is starting up its new, cost-efficient gaming system console, the yuu. Tennindo currently has
4,500
cash-paying customers and makes a profit of
$70
per unit. Tennindo wants to expand its customer base by allowing customers to buy on credit. It estimates that credit sales will bring in an additional
1,400
customers per year, but that there will also be a default rate on credit sales of
5%.
It costs
$220
to make a yuu, which retails for
$290.
If all customers (old and new) buy on credit, what is the cost of $10
per customer?If all customers (old and new) buy on credit, what is the cost of bad debt without credit screening?
(Round to the nearest dollar.)
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