a) Red Corporation reported a total sale of 50,500 units in last year. It took 50 days to collect accounts receivable. The selling price was Tk. 15 per unit while the variable cost was Tk.9 per unit. The board is currently investigating a change in the collection of accounts receivable that is expected to result in a 6% increase in total sales unit and 16% increase in the average collection period. The change will increase the current bad debt from 1.5% to 3% of sales. The firm's opportunity cost on its investment in accounts receivable is 11.5%. Assume a 365- day a year. Required: Would you recommend the proposed plan? How much will be the net benefit from the proposed plan?
