Currently, The Toy Box sells 465 units a month at an average price of $42 a unit. The company thinks it can increase sales

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?    A.  $2,120 B.  $2,730 C.  $2,760 D.  $2,810 E.  $5,070 Incremental cash flow = ($42 - $21) (130) = $2,730

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.    A.  2,830 units B.  2,910 units C.  3,333 units D.  3,414 units E.  3,526 units Break-even point = Q′ - 2,800 = ($40 × 2,800)/{[($40 - $21)/0.005] - $21} = 30 units Q′ = 2,800 + 30 = 2,830 units

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.    A.  1,943 units B.  2,117 units C.  2,145 units D.  2,406 units E.  2,548 units Break-even point = Q′ - 2,100 = ($86,500)/{[(($86,500/2,100) - $18)/0.012] - $18} = 45 units; Q′ = 2,100 + 45 = 2,145 units