Dome metals has credit sales of $126,000 yearly with credit terms of net 90 days, which is also the average collection period. assume the firm adopts new credit terms of 4/18, net 90 and all customers pay on the last day of the discount period. any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 10 percent. the new credit terms will increase sales by 10% because the 4% discount will make the firm's price competitive. a. if dome earns 30 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted? (use a 360-day year.) b. should the firm offer the discount?

Make or buy eastside company incurs a total cost of $120,000 in producing 10,000 units of a component needed in the assembly of its major product. the component can be purchased from an outside supplier for $11 per unit. a related cost study indicates that the total cost of the component includes fixed costs equal to 50% of the variable costs involved. a. should eastside buy the component if it cannot otherwise use the released capacity? present your answer in the form of differential analysis. use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. cost from outside supplier $answer variable costs avoided by purchasing answer net advantage (disadvantage) to purchase alternative $answer b. what would be your answer to requirement (a) if the released capacity could be used in a project that would generate $50,000 of contribution margin? use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.