Wilder Corporation is considering granting credit to currently limited customers or no-credit customers. The following information is given:
|
Category
|
Bad Debt
Percentage
|
Collection
Period
|
Credit Terms
|
Incremental Annual Sales
Accompanying
Relaxation in Credit
Standards ($)
|
|
A
|
3
|
20 days
|
Full
|
250,000
|
|
B
|
6
|
45 days
|
Restricted
|
540,000
|
|
C
|
10
|
90 days
|
No credit
|
800,000
|
Gross profit approximates 12 percent of sales. The rate of return is 18 percent. Should credit be extended to categories B and C?