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Silver oak has annual sales of Rs.24 lakhs. The selling price per unit is Rs.10...

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Accounting

Silver oak has annual sales of Rs.24 lakhs. The selling price per unit is Rs.10 and variable cost is 70% of the selling price. The required rate of return on investment is 20%, average cost is Rs.9 per unit, annual collection expenditure is Rs.50,000 and percentage of default is 3%, credit terms 2 months. Solver Oak is considering the change in credit policy by following programme A or programme B.Prog AProg B.11.5Average collection period75,000Annual collection expensesPercentage default2%1,50,0001%Determine which collection programme should be followed by the company.

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