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(Solved): YoungStar Corporation is currently selling its products for RM50 per unit and all sales are on cre ...



YoungStar Corporation is currently selling its products for RM50 per unit and all sales are on credit. In the year \( 2022,20

YoungStar Corporation is currently selling its products for RM50 per unit and all sales are on credit. In the year units were sold. The variable cost per unit is RM20. The company is deciding to relax its credit standards which will increase sales by , increase average collection period (ACP) from 25 days to 30 days, and increase bad debts from to of credit sales. The opportunity cost of tying up funds in its account receivable is Required: a. Calculate the additional profit from the increase in sales. (5 marks) b. Calculate the cost of additional investment in accounts receivable. (5 marks) c. Calculate the overall benefit/loss . (5 marks) d. Should YoungStar Corporation relax its credit standards and Why?


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a. Contribution per Unit = Sale Price ?Variable cost =50?20=30Increase in Sale units =20,000×5%=1,00
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