What would be the incremental cost of carrying receivables if the change were made?
A) -$108,750 (carrying costs would decline)
B) $116,250
C) $157,900
D) -$225,000 (carrying costs would decline)

Question

Quizplus · Accepted Answer

The incremental cost of carrying receivables would decline by $108,750 if the change were made. This is because the average collection period would decrease from 45 days to 30 days, which would reduce the amount of interest that the company has to pay on its receivables.

What Would Be the Incremental Cost of Carrying Receivables If