The following data are given on current operations of MOMS Trading: Sales volume (unis) 108,000 Unit selling price P10.00 Unit variable costs and expenses 4.00 Fixed costs and expenses 320,000 Gross profit rate 40% Terms of sale 25 days charge Minimum desired rate of return 30% A proposal has been presented to the effect that the terms of sales be prolonged to 30 days at the current selling price in order to increase sales volume by 25%. There are objections to the said proposal because of possible loss from bad debts estimated at 2% of increased sales and an expected increase in inventory requirement despite the plan to maintain it at its current level that is equal to 25 day’s sales. Do you agree to the proposal? Why? Show computati
The following data are given on current operations of MOMS Trading: Sales volume (unis) 108,000 Unit selling price P10.00 Unit variable costs and expenses 4.00 Fixed costs and expenses 320,000 Gross profit rate 40% Terms of sale 25 days charge Minimum desired rate of return 30% A proposal has been presented to the effect that the terms of sales be prolonged to 30 days at the current selling price in order to increase sales volume by 25%. There are objections to the said proposal because of possible loss from bad debts estimated at 2% of increased sales and an expected increase in inventory requirement despite the plan to maintain it at its current level that is equal to 25 day’s sales. Do you agree to the proposal? Why? Show computati
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following data are given on current operations of MOMS Trading:
| Sales volume (unis) | 108,000 |
| Unit selling price | P10.00 |
| Unit variable costs and expenses | 4.00 |
| Fixed costs and expenses | 320,000 |
| Gross profit rate | 40% |
| Terms of sale | 25 days charge |
| Minimum desired |
30% |
A proposal has been presented to the effect that the terms of sales be prolonged to 30 days at the current selling price in order to increase sales volume by 25%. There are objections to the said proposal because of possible loss from
Do you agree to the proposal? Why? Show computations
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