Credit Policy. Simon Corporation is evaluating a relaxation of its credit policy. At present, 70 percent of sales are on credit and there is a gross margin of 20 percent. Additional data are:...

Credit Policy. Simon Corporation is evaluating a relaxation of its credit policy. At present, 70 percent of sales are on credit and there is a gross margin of 20 percent. Additional data are:

Current                                Anticipated

Sales                      $500,000              $640,000

Credit sales         $410,000             $520,000

Collection expenses       3% of credit sales            4% of credit sales

Collection period              72 days                  90 days

Using 360 days in a year, answer the following questions: (a) What is the change in gross profit associated with the proposal? (b) What is the incremental change in collection expenses? (c) What is the change in average accounts receivable?