A firm is analyzing a relaxation of credit standards that is expected
A firm is analyzing a relaxation of credit standards that is expected to increase sales 10 percent. The firm is currently selling 400 units at an average sale price per unit of $575, and the variable cost per unit is $400 at the current sales volume.
The average cost per unit is $425. What is the additional profit contribution from sales if credit standards are relaxed?
A) $23,000
B) $16,000
C) $6,000
D) $7,000
ANSWER
D
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