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Curtis Toy Manufacturing Company

Curtis Toy Manufacturing Company - ANSWER KEY 18 a Added...

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ANSWER KEY 18. a. Added sales ................................................ $240,000 Accounts uncollectible (12% of new sales) 28,800 Annual incremental revenue ...................... 211,200 Collection costs ......................................... 21,000 Production and selling costs (72% of new sales) .................................. 172,800 Annual income before taxes ...................... 17,400 Taxes (30%) .............................................. 5,220 Incremental income after taxes .................. $ 12,180 Receivable turnover = 6.0x 0 . 6 000 , 240 $ = 40,000 in new receivables Return on incremental investment = % 45 . 30 000 , 40 $ 180 , 12 $ = b. Added sales ............................................... $240,000 Accounts uncollectible (14% of new sales) – 33,600 Annual incremental revenue ...................... $206,400 Collection costs ......................................... –21,000 Production and selling costs (72% of new sales) .................................. –172,800 Annual income before taxes ...................... $ 12,600 Taxes (30%) ..............................................
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