Question content area top Part 1 Shortening the credit period A firm is contemplating shortening its credit period fro

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Question content area top
Part 1
Shortening the credit period   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
46
to
35
days. ​ Bad-debt expenses are expected to decrease from
1.6%
to
1.1%
of sales. The firm is currently selling
12,200
units but believes that as a result of the
proposed​ change, sales will decline to
10,100
units. The sale price per unit is
$56​,
and the variable cost per unit is
$46.
The firm has a required return on​ equal-risk investments
of
25.6%.
Evaluate this​ decision, and make a recommendation to the
firm.  
​(Note​:
Assume a​ 365-day year.)
Question content area bottom
Part 1
The reduction in profit contribution from a decline in sales
is
​$enter your response here.
  ​(Round to the nearest dollar. Enter as a
negative​ number.)
Part 2
The benefit from the reduced marginal investment in​ A/R
is
​$enter your response here.
​(Round to the nearest​ dollar.)
Part 3
The cost savings from the reduction in bad debts is
​$enter your response here.
​(Round to the nearest​ dollar.)
Part 4
The net profit or loss from implementing the proposed plan
is
​$enter your response here.
​(Round to the nearest dollar. Enter a negative number for
a​ loss.)
Part 5
Is the proposed plan​ recommended?  
▼
No
Yes
  ​(Select from the​ drop-down menu.)