As treasurer of the Universal Bed Corporation, Aristotle Procrustes is worried about his bad debt ratio, which is currently running at 6.7%. He believes that imposing a more stringent credit policy...

As treasurer of the Universal Bed Corporation, Aristotle Procrustes is worried about his bad debt ratio, which is currently running at 6.7%. He believes that imposing a more stringent credit policy might reduce sales by 5% and reduce the bad debt ratio to 4.7%. Assume current sales are $100.

a. If the cost of goods sold is 73% of the selling price, what is the expected profit on the current credit policy?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. If the cost of goods sold is 73% of the selling price, what is the expected profit on the more stringent credit policy?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Should Mr. Procrustes adopt the more stringent policy?