Question: Compton Audio sells MP3 players. During 2008, Compton sold 1,000 units at an average of $300 per unit. Each unit cost Compton $180. At present,

Compton Audio sells MP3 players. During 2008, Compton sold 1,000 units at an average 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.

Step by Step Solution

★★★★★

3.52 Rating (159 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

1 Expected gross margin Sales with discount 1400 80 300 ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

145-B-A-C-R (1296).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Compton Audio sells MP3 players. During 2011, Compton sold 1,000 units at an average of $250 per unit. Each unit cost Compton $100. At present, Compton offers no sales discounts. Comptons controller...

1. A mail-order house uses an average of 300 mailing bags per day. The number of bags needed each day is approximately normally distributed with = 50. How many bags must the company have on hand at...

Shoppers enter Hamilton Place Mall at an average of 120 per hour. What is the probability that at least 35 shoppers will enter the mall between 5:00 and 5:10 pm?

DISCOUNT POLICY AND GROSS MARGIN Compton Audio sells MP3 players. During 2008, Compton sold 1,000 units at an average of $300 per unit. Each unit cost Compton $180. At present, Compton offers no...

Discount Policy and Gross Profit OBJECTIVE 2 Parkdale Audio sells MP3 players. During 2018, Parkdale sold 1,000 units at an average of $\$ 250$ per unit. Each unit cost Parkdale \$100. At present,...

Discount Policy and Gross Profit Compton Audio sells MP3 players. During the year, Compton sold sold 800 units at an average of $300 per unit. Each unit costs Compton $180. At present, Compton offers...

DISCOUNT POLICY AND GROSS MARGIN. Compton Electronics sells Motorola cellular phones. During 19x8, Compton sold 1,000 units for $300 per unit. Each unit costs Compton $180. At present, Compton offers...

(Appendixes1) DISCOUNT POLICY AND GROSS MARGIN. Compton Electronics sells Motorola cellular phones. During 19x8, Compton sold 1,000 units for $300 per unit. Each unit costs Compton $180. At present,...

(Appendixes) DISCOUNT POLICY AND GROSS MARGIN. Compton Electronics sells Motorola cellular phones. During 19x8, Compton sold 1,000 units for $300 per unit. Each unit costs Compton $180. At present,...

By writing 1/x = 1/[1 - (1 - x)] and using the known expansion of 1 / (1 - x), find the Taylor series for 1 / x in powers of x - 1?

A support bar will be in equilibrium (balanced) at the fulcrum, O, if m1x + m2y = m3z, where m1, m2, and m3 represent masses and x, y, and z represent the distance of the masses to the fulcrum. Draw...

How to calculate the margin of safety?

11.37 Deer and pine seedlings. In the setting of Exercise 11.36, what percent of the trees that were damaged by deer were less than 1/3 covered by thorny plants?

Describe the nature of the assets that compose the following section of a balance sheet. (a) Current assets, (b) Property, plant, and equipment.

What is the difference between a current liability and a long-term liability?

Please show work The cost of preferred stock Firms Chat carry preferred stock In their capital mix want to not only distribute dividends Co common stockholders but also maintain credibility in the...

In the hit song "How 'Ya Gonna Keep 'Em Down on the Farm" we listened to this week, Who is hard to keep down on the farm? O The livestock who keep escaping due to poor fencing. O The livestock who...

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown...