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XYZ company believes that its collection cost could be reduce through modification of collection procedures....

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Accounting

XYZ company believes that its collection cost could be reduce through modification of collection procedures. this action is expected to result in a lengthening of the average collection period from 30 days to 36 days; however, there will be no change in uncollectible accounts. The company's budgeted credit sales for the coming year is $28,800,000 and short-term interest rates are expected to average 7%. (use a 360-day year)

Required: The minimum savings in collection costs for the current year to make changes in collection procedures cost beneficial.

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