All $640,000 of the sales will be collectible. however, collection costs will be 5 percent of sales, and production and selling costs will be 75 percent of sales. the cost to carry inventory will be 6 percent of inventory. depreciation expense on plant and equipment will be 5 percent of plant and equipment. the tax rate is 30 percent. a. compute the investments in accounts receivable, inventory, and plant and equipment based on the turnover ratios. add the three together.

Wisconsin snowmobile corp. is considering a switch to level production. cost efficiencies would occur under level production, and after tax costs would decline by $36,000, but inventory would increase by $300,000. wisconsin snowmobile would have to finance the extra inventory at a cost of 13.5 percent.a. determine the extra cost or savings of switching over to level production. should the company go ahead and switch to level production? b how low would interest rates need to fall before level production would be feasible?