CumChan Is Contemplating an Extension of Its Credit Period from Net

question 85

Essay

CumChan is contemplating an extension of its credit period from net 15 to net 60.Currently, the CumChan sells 500,000 units annually at a price of $1.20 per unit.The average cost per unit is $0.85.The credit period extension is expected to increase sales by 60,000 units, and increase bad-debt losses by $10,500 per year.The marginal cost per unit for the decreased number of units to be produced is $0.75.If CumChan's tax rate is 45%, and the interest rate on short-term bank loans is 10%, should the firm increase its credit period? What underlying assumptions are important in our analysis?

Identify strategies for entering and expanding in a market, including the use of analytics and feedback loops.

Distinguish between different market analysis strategies (top-down vs bottom-up) and their application in estimating market potential.

Understand the value and process of segmentation in targeting the launch market and approach for establishing a market foothold.

Recognize the role of exclusionary personas in refining marketing and product development focus.

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Definitions:

Disease

A disorder of structure or function in a human, animal, or plant, especially one that produces specific symptoms or affects a specific location and is not simply a direct result of physical injury.

Psychodynamic Therapy

A form of depth psychology, focusing on the unconscious mind and childhood experiences, and uses this framework to treat mental illness.

Rational-Emotive Therapy

A type of cognitive-behavioral therapy focusing on altering negative thought patterns to overcome emotional and behavioral issues.

Withdrawal Symptoms

Manifestations of physical or psychological nature that emerge when the consumption of a dependent substance is decreased or halted.