East Lansing Appliances

question 109

Multiple Choice

East Lansing Appliances
East Lansing Appliances (ELA) expects to have sales this year of $15 million under its current credit policy. The present terms are net 30; the days sales outstanding (DSO) is 60 days; and the bad debt loss percentage is 5 percent. Because ELA wants to improve its profitability, the treasurer has proposed that the credit period be shortened to 15 days. This change would reduce expected sales by $500,000, but it would also shorten the DSO on the remaining sales to 30 days. Expected bad debt losses on the remaining sales would fall to 3 percent. The variable cost percentage is 60 percent, and the cost of capital is 15 percent.
-Refer to East Lansing Appliances.What would be the incremental cost of carrying receivables if this change were made?

• A) $108,750
• B) −$116,250 (carrying costs would decline)
• C) $157,900
• D) −$225,000 (carrying costs would decline)
• E) $260,500

Understand the concept of attitudinal structuring and its importance in labor-management relationships.

Grasp the legislative framework and procedural aspects governing public sector bargaining.

Recognize the influence of external data and environmental factors on the bargaining process.

Identify strategies and actions that can undermine or support the collective bargaining process.

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Definitions:

International Integrated Reporting Committee

An organization that champions the evolution of corporate reporting to articulate value creation over time, integrating financial and non-financial aspects.

GRI

The Global Reporting Initiative, a leading organization that provides a comprehensive sustainability reporting framework used worldwide.

Triple Bottom Line

An accounting framework that incorporates three dimensions of performance: social, environmental, and financial.

Environmental

Pertains to the natural world or the ecological and physical conditions in which an organization operates.