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Answer (A) is correct . Dogfur can calculate expected discounts taken under the new credit policy as follows: ? Total sales $20,000,000 Times:? percentage on credit ¡Á?????????80% Credit sales $16,000,000 Times:? subject to discount ¡Á?????????60% Sales subject to discount $??9,600,000 Times:? discount percentage ¡Á???????????3% Expected discounts taken $?????288,000<
Answer (B) is incorrect because This figure assumes all sales are on credit and that 60% of discounts are taken.
Answer (C) is incorrect because This figure is the potential discount on all credit sales.
Answer (D) is incorrect because The amount of $600,000 assumes all sales are on credit and that 100% of the discounts are taken.