6400:485

Solt of the Earth, Case #18; p. 85
Exhibit 2 & 3

Annual Sales
Original Sales
Incremental Sales
Variable Costs

Current
Policy
$25,000,000
$25,000,000

Policy A
$27,250,000
$25,000,000
$2,250,000

Policy B
$29,250,000
$27,250,000
$2,000,000

Policy C
$31,000,000
$29,250,000
$1,750,000

Policy D
$32,500,000
$31,000,000
$1,500,000

Policy E
$33,750,000
$32,500,000
$1,250,000

78%

ACP
From Original Sales
From Incremental Sales

60

64.29
64.29

70.59
70.59

80
80

94.74
94.74

120
120

Bad Debt
From Original Sales
From Incremental Sales

$500,000

$500,000
$56,250

$556,250
$60,000

$616,250
$61,250

$677,500
$60,000

$737,500
$56,250

$3,150,000

$3,175,000
$25,000

$3,200,000
$25,000

$3,220,000
$20,000

$3,240,000
$20,000

$3,255,000
$15,000

15%

15%
17%

15%
19%

15%
21%

15%
26%

15%
29%

$495,000

$440,000

$385,000

$330,000

$275,000

Avg. Inventory
Incremental Inventory
Required Return
Inventory/Original A/R
Incremental

Marginal Benefit
Increase in Sales

Marginal Costs
Additional Investment in A/R
Cost of Increased Investment in A/R

$ 699,729.17
$ 118,953.96

$ 1,568,770.83
$ 298,066.46

$ 2,722,222.22
$ 571,666.67

$ 4,386,250.00
$ 1,140,425.00

$ 7,083,333.33
$ 2,054,166.67

Cost of Increased Investment in Inventory

$25,000

$25,000

$20,000

$20,000

$15,000

Cost of Increase in Bad Debt Loss

$56,250

$60,000

$61,250

$60,000

$56,250

$294,796

$56,934

-$267,917

-$890,425

-$1,850,417

Marginal Benefits - Marginal Costs

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