Question: ABC Corporation sells its product for Php90 per unit for which it incurs a total of Php63 as variable cost per unit. Its annual credit

ABC Corporation sells its product for Php90 per unit for which it incurs a total of Php63 as variable cost per unit. Its annual credit sales (units) amounted to 80,000 units. Based on its current policy, it has a collection period of 20 days. It is now considering relaxing its credit standards. If it does, sales will increase by 20%; collection period will increase to 30 days; bad debts losses are anticipated to be 5% of the incremental sales; and collection costs will increase by Php50,000.

Required: 1. If the proposed relaxation of credit standards is implemented, what would be the net benefit (loss)?

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