Discount Policy and Gross Profit
Parker Electronics sells cell phones. During 2013, Parker sold 1,470 units at an average of $450 per unit. Each unit cost Parker $300. At present, Parker offers no sales discounts. Parker's controller suggests that a generous sales discount policy would increase annual sales to 2,000 units and also improve cash flow. She proposes 3/15, n/20 and believes that 75% of the customers will take advantage of the discount.
Required:
1. If the controller is correct, determine how much the new sales discount policy would add to net sales and gross margin.