1 answer

Please answer question #1 Scarch Gardner, Icffrey Steven G Comprehensive_Problem 2 FALL_2020 - Protected View -...

Question:

Please answer question #1

Scarch Gardner, Icffrey Steven G Comprehensive_Problem 2 FALL_2020 - Protected View - Saved to this BC- File Home Insert Draw

Scarch Gardner, Icffrey Steven G Comprehensive_Problem 2 FALL_2020 - Protected View - Saved to this BC- File Home Insert Draw Design Layout References Mailings Review View Help RCM O PROTECTED VIEW Be carefulfiles from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Share Comments Enable Editing X BUSI 320 Comprehensive Problem 2 FALL 2020 You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made by your company. Each proposal is independent of the other. Answer all questions. Showing your work may earn you partial credit. Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks. Sales are projected to increase by $240,000 per year if credit is extended to these new customers. of the new accounts receivable generated, 6% are projected to be uncollectible. Additional collection costs are projected to be 2% of incremental sales (whether they actually end up collected or not), and production and selling costs are projected to be 78% of sales. Your firm expects to pay a total of 30% of its income after expenses in taxes. 1) Compute the incremental income after taxes that would result from these projections: 2) Compute the incremental Return on Sales if these new credit customers are accepted: If the receivable turnover ratio is expected to be 3 to 1 and no other asset buildup is needed 1 to serve the new customers... 3) Compute the additional investment in Accounts Receivable 4) Compute the incremental Return on New Investment 5) If your company requires a 20% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers? Explain. Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days. Page 1 of 1 364 words Focus DC EL 100% Type here to search O GA 1644 13/09/2020

Answers

Incremental Revenue From Project = $240,000

(-)Production & selling cost 78% of

sales ($240,000*78%) = ($187,200)

(-)Uncollectible ($240,000*6%) = ($ 14,400)

(-)Additional collection cost

($240,000*2%) = ($ 4,800)

Earnings Before Tax = $33,600

(-) Taxes @30% = ($10,080)

Net Income from new Project = $23,520

.

Similar Solved Questions

1 answer
I need to prepare a statement of cash flows using the indirect method using this information...
I need to prepare a statement of cash flows using the indirect method using this information Assets: Dec. 31st, 2020 Dec. 1st, 2019 Cash 680,000 360,000 Investments 110,000 290,000 Accounts receivable 115,000 130,000 Inventory 230,000 195,000 Prepaid adver...
1 answer
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details...
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1st Qu...
1 answer
Use the following data to answer the next THREE questions: Nellis Manufacturing uses a job-order costing...
Use the following data to answer the next THREE questions: Nellis Manufacturing uses a job-order costing system to account for costs of its jobs. As of the beginning of April the company had two jobs already in progress (jobs 401 and 402). Below are the costs incurred to date on each of these jobs J...
1 answer
Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the...
Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company's mine to its two steel mills-the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $219,400 per year, consisting of $0.18 per ton variable...
1 answer
Sarasota Inc. had sales of $2,220,000 for the first quarter of 2017. In making the sales,...
Sarasota Inc. had sales of $2,220,000 for the first quarter of 2017. In making the sales, the company incurred the following costs and expenses. Variable Fixed Cost of goods sold $934,000 $448,000 Selling expenses 121,000 81,000 Administrative expenses 117,000 141,000 Prepare a CVP income statement ...
1 answer
What would be the major product of the following reaction? но Br HO3SO 85% H2SO4 NaBr...
What would be the major product of the following reaction? но Br HO3SO 85% H2SO4 NaBr heat 1) 2) 4) 31...
1 answer
The initial population of A city is 40000. In a year, the birth and death rates...
The initial population of A city is 40000. In a year, the birth and death rates of this city are 0.7 and 0.55, respectively. There is a series migration problem from city B to city A with 0.3 rate every 2 years. The maximum carrying capacity of this city is 90000. Model the population of growth for ...
1 answer
-1-0.5x a) Using model equation determine the nd Y axis. e moment of inertia for the...
-1-0.5x a) Using model equation determine the nd Y axis. e moment of inertia for the shaded area about the x a 1-05S...
1 answer
2. [-/10 Points] DETAILS DEVORESTAT9 9.E.046. MY NOTES ASK YOUR TEACHER PRACTICE ANOTHER As part of...
2. [-/10 Points] DETAILS DEVORESTAT9 9.E.046. MY NOTES ASK YOUR TEACHER PRACTICE ANOTHER As part of a larger project to study the behavior of stressed-skin panels, a structural component being used extensively in North America, an article reported on various mechanical properties of Scotch pine lumb...
1 answer
Instead of propanoic acid, show using propanol please 5. Synthesis: Show how the amine could be...
Instead of propanoic acid, show using propanol please 5. Synthesis: Show how the amine could be prepared from benzene, propanoic acid and dimethyl amine. More than one synthetic transformation will be necessary. You have unlimited access to any inorganic reagent. ОН and and...
1 answer
An insurance company issues 1250 vision care insurance policies. The number of claims filed by a...
An insurance company issues 1250 vision care insurance policies. The number of claims filed by a policyholder under a vision care insurance policy during one year is a random variable with u=2 and = 72. Assume the numbers of claims filed by different policyholders are mutually independent. Calculate...
1 answer
Is this right? NPV and IRR can provide contradictory decisions for mutually exclusive projects when the...
is this right? NPV and IRR can provide contradictory decisions for mutually exclusive projects when the discount rates on the projects may differ. the scale of the projects may differ. the risk of the projects may differ. all of the above. Question 16 (2 points) Saved AVANA CALnan hand....
1 answer
Fill all Answer Blanks with your final answer and provide all calculations in a separate paper....
Fill all Answer Blanks with your final answer and provide all calculations in a separate paper. Problem #1 A certain logic function was implemented using the logic circuit, based on a four input multiplexer, shown in the figure. Find a minimal POS expression that implements the same logic function A...
1 answer
Why might the college environment provide a challenge to your psychological health?
Why might the college environment provide a challenge to your psychological health?...
1 answer
For 4,5 and 6, which are the correct answers Question 4 What is the correct term...
for 4,5 and 6, which are the correct answers Question 4 What is the correct term for this relationship? Contractor Constructs Building Customer Binary Complex Unary Question 5 10 pts What would this relationship be considered? Computer Windows Macintosh The symbol combination used is not valid in an...
1 answer
Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items...
Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it...
1 answer
3. Consider a retailer selling blenders currently priced at $54. Suppose it pays $29 per blender...
3. Consider a retailer selling blenders currently priced at $54. Suppose it pays $29 per blender from the manufacturer. A. Initial contribution margin is $54-$29= $25 B. Suppose it is considering a 33% cut in price to boost sales. What is the break-even change in sales required to maintain its profi...