Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 13,000 to 14,300 units during the coming year; the average collection period is expected to increase from 45 to 65 days; and bad debts are expected to increase from 11% to 33% of sales. The sale price per unit is $40, and the variable cost per unit is $31. The firm's required return on equal-risk investments is 25.3%. Evaluate the proposed relaxation, and make a recommendation to the firm. (Note: Assume a 365-day year.) The additional profit contribution from an increase in sales is?
Q: What is Turnbull's estimated growth rate?
A: To estimate Turnbull's growth rate, we use a financial concept known as the sustainable growth rate…
Q: What duties/responsibilities impacted you most and why? on your accounting practicum training
A: The question is asking about the duties or responsibilities that had the most impact during my…
Q: None
A: Definition of Profitability Index:The profitability index (PI) is a financial metric used to…
Q: Selected current year company information follows: Net income Net sales Total liabilities,…
A: Definition of Financial Ratios:Financial ratios are mathematical comparisons of financial statement…
Q: please provide detailed solution and give the explanation of the concept..
A: To determine the unit product cost of each product using the Activity-Based Costing (ABC) system, we…
Q: E G H $4400 is deposited in a savings certificate at a bank at 3.5% interest. What is the effective…
A: We'll find the effective interest rate for both continuous and quarterly compounding.Given:-…
Q: Exercise 8-3 (Algo) Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on sales of…
A: 1: Compute Total Variable Cost per UnitFirst, we need to identify which costs are variable. Variable…
Q: QUESTION: Panda Inc.'s net income for the most recent year was $15,985. The tax rate was 35 percent.…
A: Earning Before Tax = Net Income/(1-Tax rate)Earning Before Tax = 15,985/(1-35%)Earning Before Tax =…
Q: nku.4 give in table format or i will give you down vote
A: Step 1: Calculate the Total Estimated Cost at Each Year-EndThe total estimated costs are the sum of…
Q: Want to give you a correct answer
A: Step 1: Given Value for Calculation Sales = s = $4.05 millionCost of Goods Sold = cogs =…
Q: The kind of debts which are needed to be repaid in a short term is known as? Fixed Liabilities…
A: :liability is something a person or company owes, usually a sum of money. Liabilities are settled…
Q: answer
A: Operating Cash Flow = Net Income + Depreciation Operating Cash Flow = 27,300+7,400 Operating Cash…
Q: Given: princial $10,000, interest rate 8%, time 240 days (use ordinary interest). Partial payments:…
A: Step 1: Calculate the initial interest accrued before the first paymentPrincipal: $10,000Interest…
Q: In operations management, 'make-to-order' production strategy is characterized by: a) Producing…
A: In operations management, the 'make-to-order' production strategy is a business production strategy…
Q: Oslo Company prepared the following contribution format income statement based on a sales volume of…
A: The first step is to calculate the contribution margin per unit. The contribution margin is the…
Q: This is the type of long-term debt where creditors do not have recourse to the assets of the company…
A: In the field of finance and accounting, there are different types of debt that a company can have.…
Q: Please Provide answer of this Question
A: Hello student! Gross profit is the difference between sales and cost of goods sold. The formula for…
Q: am.123.
A: The first step is to calculate the carrying amount of the assets. The carrying amount is the…
Q: The Bizayeva CPA firm is auditing Hagopian, Inc. The company is a manufacturer. It manufactures…
A: To determine the required sample size for testing accounts receivable using Monetary Unit Sampling…
Q: O x ezt.prod.mheducation.com/Me × ezt.prod.mheducation.com/Me x ezt.prod.mheducation.com/Me +…
A: Direct Material170000Direct Labor120000Variable overhead20000Traceable Fixed overhead…
Q: Need Correct Answer of this Question
A: Calculate the Earnings Before Interest and Taxes (EBIT).Adjust EBIT by adding back non-cash expenses…
Q: Accounts Payable is a liability account and should be credited when: When the accountant must…
A: Accounts Payable is a liability account that represents the amount that a company owes to its…
Q: Provide Correct solution please
A: Formula:Profit Margin Ratio = (Gross profit / Sales) x 100% Solution:Profit Margin Ratio = (…
Q: You are an accountant for ABC Corp. Your purchasing department has procured products invoiced for…
A: The invoice terms 2/10 Net 30 mean that the buyer can take a 2% discount of the invoice amount if…
Q: it View Bookmarks History Profiles Tab Window Help YouTube B)-abi X MACC101 Principle: X Accounting…
A: Year 1 Adjustment for Bad Debts Accounts Receivable (Ending balance) = $1,353,500 (sales) − $21,600…
Q: The purchase book of a merchandising business includes: Purchase returns All cash purchases Credit…
A: The purchase book, also known as the purchase journal or purchase day book, is a special journal…
Q: None
A: Step 1: Estimated total variable manufacturing overhead Estimated total variable manufacturing…
Q: K On January 1, 2020, Gardner Corporation issued five-year, 4% bonds payable with a face value of…
A: The bonds were issued at 92% of their face value. Therefore, the initial carrying value of the bonds…
Q: None
A: First, determine the net annual CASH flow generated by the investment during its useful life. Net…
Q: A Company has an opportunity to produce and sell a new product. Your team has been asked to use…
A: The payback period is the time it takes for an investment to generate an amount of income or cash…
Q: Warr Company is considering a project that has the following cash flow data. What is the project's…
A: To find the Internal Rate of Return (IRR) of this project, we need to solve for the discount rate…
Q: Nithya is setting up QuickBooks Online for the first time. When would she enter an opening balance?…
A: The opening balance is the amount of funds in a company's account at the beginning of a new…
Q: None
A: Here's where each account would typically be presented on a classified balance sheet:Inventory -…
Q: If you intend to be a shareholder in the company over the long term, why is itthat you may not have…
A: Detailed explanationWhen considering an investment horizon spanning several years or more,…
Q: Hello tutor I want answer of this Question and I want this in text Format.
A: Step-by-Step Solution1. Determine the dividends that can be expected in 2013, 2014, and 2015:2013…
Q: Please provide Answer Fast
A: Step 1: Introduction to Gross Profit:For a manufacturing firm, the gross profit is determined by…
Q: The payouts for the Powerball lottery and their corresponding odds and probabilities of occurrence…
A: The loss in this context is calculated as (1−mean) because the ticket costs $1.00.- The mean is the…
Q: Solve this
A:
Q: In 2023, albert earned $100,000 anually and contributed ei and cpp in alberta at a maximum amount.…
A: Albert's EI contribution is calculated based on a percentage of his earnings. In 2023, the maximum…
Q: Solve this problem
A: Detailed explanation:.1. This is based on the Modigliani-Miller theorem on dividend irrelevance,…
Q: Audit strategy must include: Characteristics of the engagement (Scope) Timing of reporting…
A: Part 2:Explanation:- Step 1: Understanding the Engagement (Scope): Caro Ltd. operates as a…
Q: Before After 5 Treated A B Untreated C D Imagine that we have a difference-in-differences…
A: From the given table:CategoriesBeforeAfterTreatedABUntreatedCDThe following is the complete…
Q: In QuickBooks Online, what is the purpose of creating a deposit as income? Select an answer: to…
A: In QuickBooks Online, a deposit is typically used to record the receipt of funds into a business's…
Q: A company's balance sheet shows $100,000 in prepaid rent. Half of that amount is for the following…
A: In this scenario, the company has prepaid rent of $100,000, half of which ($50,000) is for the…
Q: Need Answer pls find it
A: SOLUTION 1)1. Inventory Period: Given:Average Inventory = $1,096,000Cost of Goods Sold (COGS) =…
Q: Want Answer in text mode
A: Step 1: Definition of Working Capital:Working Capital is calculated as current assets minus current…
Q: From the schedule below provided for quality control activities, determine the appraisal costs:…
A: Appraisal costs are the costs that a company incurs for assessing its quality control processes and…
Q: None
A: To calculate the pretax income from the adjusted trial balance provided, we'll follow these…
Q: What are undeposited funds in QuickBooks Online? Select an answer: payments received from…
A: In QuickBooks Online, undeposited funds refer to payments received from customers that have not yet…
Q: None
A: Calculate PV factor of an ordinary annuity of 6.5% using this PV factor formula: PV = (1 - (1 +…
Step by step
Solved in 2 steps
- Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 12,000 to 13,200 units during the coming year; the average collection period is expected to increase from 50 to 70 days; and bad debts are expected to increase from 1% to 2.5% of sales. The sale price per unit is $41, and the variable cost per unit is $29. The firm's required return on equal-risk investments is 9%. Evaluate the proposed relaxation, and make a recommendation to the firm. (Note: Assume a 365-day year.) The additional profit contrbution from an increase in sales is $ ? (round to the nearest dollar) The cost from the increased marginal investment in A/R is $ ? (round to the nearest dollar)Edward Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 10,000 to 11,000 units during the coming year, the Average Collection Period is expected increase from 45 to 60 days; and Bad Debts are expected to increase from 1% to 3% of sales. The Sale Price per unit is $40, and the Variable Cost per unit is $31. The firm’s required on equal-risk investment is 25%. A. What is the Net Gain or Los from implementing the Proposed Plan? (Format: 1,111 G or 1,111 L) B. Would you recommend the Proposed Relaxation? (Format: Yes or No)Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 5% from 10,000 to 10,500 units during the coming year; the average collection period is expected to increase from 40 to 55 days; and bad debts are expected to increase from 2% to 4% of sales. The sale price per unit is $39, and the variable cost per unit is $29. The firm's required return on equal-risk investments is 9.4%. Evaluate the proposed relaxation, and make a recommendation to the firm. (Note:Assume a 365-day year.) a. the cost from the increased marginal investment in A/R is? (round to nearest dollar) b. the cost from an increase in bad debts.? (round to nearest dollar) c. compute the net profit from the proposed plan.
- Farmers World, a firm specializing in fertilizers, is evaluating a proposal to relax the credit standards to increase sales. The implemen- tation of this plan is expected to increase sales by 10% from 15,500 to 17,050 units in the following year. The average collection period will increase from 30 to 45 days, and bad debts are expected to increase from 2% to 5% of sales. The selling price per bag is $15, and the variable cost per bag is $12. The required rate of return on equal-risk investments is 22%. Should the proposed plan be implemented? Explain the financial impact. (Note: Assume a 365-day year.) Exercises January February March Dynabase Tool has forecast its total funds requirements for the coming year as shown in the following table. Month Month Amount April May June Exercises Amount $2,000,000 2,000,000 2,000,000 4,000,000 6,000,000 9,000,000 July August September October November December $12,000,000 14,000,000 9,000,000 5,000,000 4,000,000 3,000,000 16 a. Divide the firm's…A firm is contemplating shortening its credit period from 40 to 30 days and believes that, as a result of this change, its average collection period will decline from 45 to 36 days. Bad debt expenses are expected to decrease from 1.5% to 1% of sales. The firm is currently selling 12,000 units but believes that as a result of the proposed change, sales will decline to 10,000 units. The sale price per unit is $56, and the variable cost per unit is $45. The firm has a required return on equal-risk investments of 25%. a. What is the net gain or loss from implementing the proposed plan? b. Would you recommend implementing the proposed plan?BRLM Company is planning to relax its credit standards to boost sales. As a result, sales are expected to increase 16 percent from 3,000 units per year to 3,480 units per year. The average collection period is expected to increase to 40 days from 30 days and bad debts are expected to double the current 1.5 percent level. The price per unit is P4,250, the variable cost per unit is P3,060. The firm’s required return on investment is 20 percent.What is the cost of marginal bad debts under the proposed plan? Group of answer choices P168,300 P19,445 P38,838 P258,923 What is the net result of implementing the proposed plan? Group of answer choices –P312,474 +P168,274 +P319,260 –P168,274
- Kent Firm is contemplating shortening its Credit Period from 40 to 30 days and believes that, as a result of this change, its Average Collection Period will decline from 45 to 36 days. Bad Debt Expenses are expected to decrease from 1.5% to 1% of sales. The firm is currently selling 12,000 units but believes that as a result of the proposed change, sales will decline to 10,000 units. The Sale Price per unit is $56, and the Variable Cost per unit is $45. The firm has a required Return on equal-risk investments of 25%. A. What is the Net Gain or Loss from implementing the Proposed Plan? (Format: 1,111 G or 1,111 L) B. Would you recommend implementing the Proposed Plan? (Format Yes or No)Jungga Inc is considering relaxing its credit standards to increase its sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 20,000units during the coming year; the average collection period is expected to increase from 35 to 50 days; and bad debts are expected to increase from 2% to 3% of sales. The sale price per unit is ₱30, and the variable cost per unit is ₱21. The firm’s required return on equal-risk investments is 25%. Evaluate the proposed relaxation and make a recommendation to the firm whether the proposed relaxation would benefit the firm. Follow the format attached. Do it in table. Make it clear and easy to understand.Jungga Inc is considering relaxing its credit standards to increase its sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 20,000units during the coming year; the average collection period is expected to increase from 35 to 50 days; and bad debts are expected to increase from 2% to 3% of sales. The sale price per unit is ₱30, and the variable cost per unit is ₱21. The firm’s required return on equal-risk investments is 25%. Evaluate the proposed relaxation and make a recommendation to the firm whether the proposed relaxation would benefit the firm.
- A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and reduce the ratio of credit sales to total revenue from 70% to 60%. The company estimates that projected sales would be 5% less if the proposed new credit policy were implemented. The firm’s short-term interest cost is 10%. Projected sales for the coming year are P100 million. Assume a 360-day year, the increase (decrease) on A/R of this proposed change in credit policy is A. P0 B. (P5,000,000) C. (P6,666,6667) D. (P13,000,000)1)Farmers World, a firm specializing in fertilizers, is evaluating a proposal to relax the credit standards to increase sales. The implementation of this plan is expected to increase sales by 10% from 15,500 to 17,050 units in the following year. The average collection period will increase from 30 to 45 days, and bad debts are expected to increase from 2% to 5% of sales. The selling price per bag is $15, and the variable cost per bag is $12. The required rate of return on equal-risk investments is 22%. Should the proposed plan be implemented? Explain. (Note: Assume a 365-day year.)2)Pebbles & Stone Enterprise currently sells on credit only and does not offer any discounts. In an attempt to increase sales, the board is considering offering a 5% discount for payment within 15 days. Currently, the average collection period is 60 days, sales are 30,000 units, selling price is $40 per unit, and variable cost per unit is $32. If the discount is implemented, it is expected that sales will…Tara’s Textiles currently has credit sales of $360 million per year and an average collection period of 60 days. Assume that the price of Tara’s products is $60 per unit and that the variable costs are $55 per unit. The firm is considering an accounts receivable change that will result in a 20% increase in sales and a 20% increase in the average collection period. No change in bad debts is expected. The firm’s equal-risk opportunity cost on its investment in accounts receivable is 14%. (Note: Use a 365-day year.) Calculate the additional profit contribution from sales that the firm will realize if it makes the proposed change. What marginal investment in accounts receivable will result? Calculate the cost of the marginal investment in accounts receivable. Should the firm implement the proposed change? What other information would be helpful in your analysis?