Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
63.
Cape May Products currently sells 650 units a month at a price of $59 a
unit. The firm believes it can increase its sales by an additional 125 units if
it switches to a net 30 credit policy. The monthly interest rate is 0.35
percent and the variable cost per unit is $38. What is the incremental cash
inflow from the proposed credit policy switch?
64.
Polly's Home Accents currently sells 320 units a month at a price of $59 a
unit. Polly thinks she can increase her sales by an additional 55 units if she
switches to a net 30 credit policy. The monthly interest rate is 0.4 percent
and the variable cost per unit is $32. What is the net present value of the
proposed credit policy switch?
65.
Currently, Glasgow Importers sells 280 units a month at a price of $729 a
unit. The firm believes it can increase its sales by an additional 40 units if it
switches to a net 30 credit policy. The monthly interest rate is 0.5 percent
and the variable cost per unit is $480. What is the net present value of the
proposed credit policy switch?
66.
Currently, The Toy Box sells 465 units a month at an average price of $42 a
unit. The company thinks it can increase sales by an additional 130 units a
month if it switches to a net 30 credit policy. The monthly interest rate is 0.4
percent and the variable cost per unit is $21. What is the incremental cash
inflow of the proposed credit policy switch?
67.
Preston Milled Products currently sells a product with a variable cost per
unit of $21 and a unit selling price of $40. At the present time, the firm only
sells on a cash basis with monthly sales of 2,800 units. The monthly interest
rate is 0.5 percent. What is the switch break-even point if the firm switched
to a net 30 credit policy? Assume the selling price per unit and the variable
costs per unit remain constant.
68.
Saucier & Co. currently sells 2,100 units a month for total monthly sales of
$86,500. The company is considering replacing its current cash only credit
policy with a net 30 policy. The variable cost per unit is $18 and the monthly
interest rate is 1.2 percent. What is the switch break-even level of sales?
Assume the selling price per unit and the variable costs per unit remain
constant.
69.
The Cellar Door currently sells 9,620 units a month for total monthly sales
of $316,000. The company is considering replacing its current cash only
credit policy with a net 30 policy. The variable cost per unit is $15 and the
monthly interest rate is 1.5 percent. What is the switch break-even level of
sales?
70.
You have the opportunity to make a one-time sale if you will give a new
customer 30 days to pay. You suspect there is a 10 percent chance this
person will never pay you. The sales price of the item the customer wants to
buy is $289. Your variable cost on that item is $156 and your monthly
interest rate is 1.75 percent. Should you grant credit to this customer? Why
or why not?
71.
You are considering renting a kiosk in the local mall for a period of three
months. Any sale you make will be a one-time sale. There is only a 79
percent chance you will collect payment on a credit sale. The product you
want to sell has a variable cost of $3.88 and a sales price of $4.99. The
monthly interest rate is 1.5 percent. Should you offer people 30 days to pay?
Why or why not?
72.
You are trying to attract new customers that you feel could become repeat
customers. The average selling price of your products is $69 each with a
$41 per unit variable cost. The monthly interest rate is 1.5 percent. Your
experience tells you that 8 percent of these customers will never pay their
bill. What is the value of a new customer who does not default on his or her
bill?
73.
You are trying to attract new customers that you feel could become repeat
customers. The average price of your product is $619 per unit with a $435
variable cost per unit. The monthly interest rate is 1.8 percent. Your
experience tells you that 9 percent of these customers will never pay their
bill. Should you offer credit terms of net 30 to attract these potential
customers? Why or why not?
74.
A firm sells 4,500 units of an item each year. The carrying cost per unit is
$2.15 and the fixed costs per order are $69. What is the economic order
quantity?
75.
The best-selling pair of roller skates The Teen Store offers sells for $79.99
a pair. The store consistently sells 5,700 pairs of these roller skates every
year. The fixed costs to order more skates is $68 and the carrying costs are
$1.95 per pair. What is the economic order quantity?
76.
One of the best selling items L.T. Ten offers sells for $9.99 a unit. The
variable cost per unit is $6.38 and the carrying cost per unit is $1.12. The
firm sells 6,500 of these units each year. The fixed cost to order this item is
$75. What is the economic order quantity?
77.
Each year you sell 950 units of a product at a price of $899 each. The
variable cost per unit is $575 and the carrying cost per unit is $16.90. You
have been buying 100 units at a time. Your fixed cost of ordering is $60.
What is the economic order quantity?
78.
Weisbrough United currently has a cash sales only policy. Under this policy,
the firm sells 410 units a month at a price of $219 a unit. The variable cost
per unit is $140 and the carrying cost per unit is $3.30. The monthly interest
rate is 1.3 percent. The firm believes it can increase its sales to 475 units a
month if it institutes a net 30 credit policy. What is the net present value of
the switch using the one-shot approach?
79.
Under the current cash sales only policy Blue Bird, Inc., will sell 215 units a
month at a price of $469 each. The variable cost per unit is $305 and the
monthly interest rate is 1.7 percent. Based on a recent survey, the firm
believes it can sell an additional 36 units per month if it offers a net 30
credit policy. What is the net present value of the switch using the one-shot
approach?
80.
Under your current cash sales only policy you sell 132 units a month for a
total sales value of $9,900. Your variable cost per unit is $44 and your
monthly interest rate is 1 percent. Based on a recent survey, you believe
that you can sell an additional 25 units per month if you offer a net 30 credit
policy. What is the net present value of the proposed switch using the
accounts receivable approach?
