Answer:
a) curently $ 20,000
proposed scenario $ 64,000
b) differential $ 44,000
c) and d)
differential contribution:
30,000 units x ($20 - 15) = 150,000
then, we subtract the 44,000 bad debt and add the 3,500 cost savings.
150,000 3,500 cost savings - 44,000 bad debt = 114,500
It would be recomented As with the contribution from sales will increase by 114,500
Step-by-step explanation:
expected sales 80,000 units at $20 each
bad debt will be 4% os sales:
80,000 x $20 x 4% = $64,000
before, the bad debt were:
50,000 units at $20 with 2% bad dbet
50,000 x $20 x 0.02 = $20,000
