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OB1 Sabres Ltd. has determined that product sales are not what they could be because they have unused capacity. As a resutt, the company is considering adjusting its marketing strategy. At present, all sales to distributors are on a cash basis, but the compention offers credit terms. Similar credit terms for OBI Sabres have been suggested. Research suggests that sales in the upcoming year would jump from $4.395 million annually to $5.69 million with credit terms of 3/10, net 30 . Furthermore, research estimates that 70 percent of the customers would take the discount and the remainder would pay on average on the 30 th day. Inventory turnover would remain at 12 times a year. Cost of goods sold (variable costs) are 65 percent of gross sales. Bad debts are estimated to be 0.65 percent of credit sales. Credit department expenses would be $51,900 per year plus the salary of 3 individuals at $36,900 per year each. One of the staff would be reassigned from another division without affecting costs or productivity as that individuai is currently redundant in that division. Marketing expenses are 5 percent of gross sales. Bank financing of working capital requirements is at 12 percent. a. Should OB1 Sabres Ltd adopt the proposed policy? No Yes b. Show the calculations. (Use 365 doys in e yeor. Do not leave ony empty speces; input o " 0 " wherever required, Round the answers to the nearest whole dollor. Negotive answers and the volues to be deducted should be indicated by a minus sign. Enter: onswers in whole dollar, not in million. Do not round intermediote colculation.| A Sales Present policy New policy A Contribution margin Discount expense Present policy New policy A Bad debt expense Present policy New policy A Marketing expense Present policy New policy A Administrative expense (related to credit department) Present policy New pollcy A Administrative expense (related to credit department) Present policy New policy Investment in accounts receivable Present policy New policy 78% of the customers 30% of the customers D Opportunity benefit on investmerit in A/R Investment in imventory. Present pollcy New policy Opportunity benefit on inv. investment Total incremental change