FM1_Final Exam_Edward B. Raymond

FM1_Final - Collection Department Expense Sales DSO Bad Debt Losses Double the personnel DSO Bad Debt Losses Added Cost Total Collection Debt

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Collection Department Expense 400,000 Sales 20,000,000 DSO 93 Bad Debt Losses 5% Current Double Collection Debt Sales 20,000,000 20,000,000 Double the personnel DSO 93 59 DSO 59 Account Receivable 5,095,890 3,232,877 Bad Debt Losses 4% Difference 1,863,014 Added Cost 400,000 Oppurtunity Cost @ 8% 149,041.10 Total Collection Debt Expense 800,000 Oppurtunity Cost @ 15% 279,452.05 Oppurtunity Cost 8% Bad Debt % 5% 4% Oppurtunity Cost 15% Bad Debt 1,000,000 800,000 Bad Debt Savings 200,000 Total Savings From Double Collection Dept @ 8% 349,041.10 Reject Reject since it is less than 400,000 @ 15% 479,452.05 Accept Accept Since it is greater than 400,000 Addition Collection Dept Expense 400,000
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Old Machine New Machine Year 2012 2013 2014 2015 2016 2017 2018 Sales 2011 21,600,000 Sales 2016 - 2018 5,000,000 Incremental Sales 0 0 0 0 5,000,000 5,000,000 5,000,000 Sales 2012 28,000,000 COGS, Depreciation and Other Expen 0 0 0 0 (3,950,000) (3,950,000) (3,950,000) Sales 2013 28,000,000 Machine Cost 2,400,000 Gross Margin
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This note was uploaded on 01/16/2012 for the course MBA 101 taught by Professor Wormer during the Spring '08 term at Indian Institute Of Management, Ahmedabad.

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FM1_Final - Collection Department Expense Sales DSO Bad Debt Losses Double the personnel DSO Bad Debt Losses Added Cost Total Collection Debt

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