A firm sells 25,000 units at an average price of Rs 200 per unit. The variable cost is 80 per cent of the sale price. The credit term is 1/10 net 30. One-tenth of the customers avail the discount and...

A firm sells 25,000 units at an average price of Rs 200 per unit. The variable cost is 80 per cent of the sale price. The credit term is 1/10 net 30. One-tenth of the customers avail the discount and the average collection period is 28 days. Administrative cost is Rs 20,000. Collection cost/sales and bad debt/sales ratios are 2% each. To increase the level of sales, credit term is changed as 2/10 net 30 as a result of which the sales are expected to be 50,000 units. The administrative cost, collection cost ratio and bad debt ratio are expected to be unchanged. The cost of funds is 10%. Tax rate is 30%. Find the net benefit of the changed credit terms.