a) A company has projected the following sales information for the first quarter
ID: 2454171 • Letter: A
Question
a) A company has projected the following sales information for the first quarter of 2016:
Credit sales are collected over a two-month period, with 55 percent collected in the month of sale and 45 percent collected in the month following sale. Total cash collections for March is
January
February
March
Cash sales
$20,000
$35,000
$40,000
Credit sales
43,000
57,000
55,000
Total sales
$63,000
$92,000
$95,000
b. In 2015, a company sold 650,000 units at $3 each. Sales volume is expected to increase by 20 percent in 2016 while the price of each unit is expected to decrease by 20 percent. The expected sales revenue for 2016 is:
January
February
March
Cash sales
$20,000
$35,000
$40,000
Credit sales
43,000
57,000
55,000
Total sales
$63,000
$92,000
$95,000
Explanation / Answer
Cash collection for march :
Cash sales 40000
credit sales :
March sales -(55000*.55 ) 30250
Feb sales (57000*.45) 25650
Total cash collection 95900
b)new selling price = 3 (1 - .20)
= 3*.80 = $ 2.40
sales units = 650,000 (1 +.20 )
= 650000*1.20
= 780,000
sales revenue = 780,000 * 2.40
= 1,872,000
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