Currently,The Toy Box Sells 465 Units a Month at an Average

question 9

Multiple Choice

Currently,The Toy Box sells 465 units a month at an average price of $42 a unit.The company thinks it can increase sales by an additional 130 units a month if it switches to a net 30 credit policy.The monthly interest rate is 0.4 percent and the variable cost per unit is $21.What is the incremental cash inflow of the proposed credit policy switch?

• A)$2,120
• B)$2,730
• C)$2,760
• D)$2,810
• E)$5,070

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Definitions:

Profit Maximizing Level

The point at which a company or business can achieve the highest possible profit given its products, services, costs, and market conditions.

Marginal Revenue Curve

A graphical representation depicting the change in total revenue that results from selling one additional unit of a product or service.

Business License

A legal authorization granted by government agencies that allows individuals or companies to conduct business within the government's geographical jurisdiction.

Profit Maximizing

The process of adjusting the production and sale of goods and services to achieve the highest possible profit.