(Solved by Humans)-Problem 5-63A DISCOUNT POLICY AND GROSS MARGIN Compton Audio sells MP3 players. During 2008,...
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Problem 5-63A DISCOUNT POLICY AND GROSS MARGIN Compton Audio sells MP3 players. During 2008, Compton sold 1,000 units at an aver- age of $300 per unit. Each unit cost Compton $180. At present, Compton offers no sales discounts. Compton’s controller suggests that a generous sales discount policy would increase annual sales to 1,400 units and also improve cash flow. She proposes 7/10, n/30 and believes that 80 percent of the customers will take advantage of the discount. Required: 1. If the controller is correct, determine how much the new sales discount policy would add to net sales. 2. Explain why the sales discount policy might improve cash flow.
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This question was answered on: 10 May, 2025
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