Bulawan Coin, Inc. is considering shortening its credit period from 30 days to 20 days and believes, as a result of this change, its average collection will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2 percent to 0.8 percent of sales. The firm is current selling 300,000 units but believes as a result of the change, sales will decline to 275,000 units. On 300,000 units, sales revenue is $4,200,000, varia costs total $3,300,000, and fixed costs are $300,000. The firm has a required return on similar-risk investments of 15 percent. Required: 1. How much was the selling price per unit? 2. How much was the variable cost per unit? 3. How much is the contribution margin per unit? 4. What is the variable cost rate? 5. How much was the marginal profit contribution? the cost
Bulawan Coin, Inc. is considering shortening its credit period from 30 days to 20 days and believes, as a result of this change, its average collection will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2 percent to 0.8 percent of sales. The firm is current selling 300,000 units but believes as a result of the change, sales will decline to 275,000 units. On 300,000 units, sales revenue is $4,200,000, varia costs total $3,300,000, and fixed costs are $300,000. The firm has a required return on similar-risk investments of 15 percent. Required: 1. How much was the selling price per unit? 2. How much was the variable cost per unit? 3. How much is the contribution margin per unit? 4. What is the variable cost rate? 5. How much was the marginal profit contribution? the cost
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 12PROB
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