The following information pertains to question 3 to 9. The February operating bu
ID: 2569068 • Letter: T
Question
The following information pertains to question 3 to 9. The February operating budget for Big Ben Boats shows the following figures:
Budgeted sales for February $100 000 and for March $200 000.
Collections for sales are 70% in the month of sale and 30% the month after the sale.
Gross margin is 30% of sales.
Administrative costs are $10 000 each month.
Beginning accounts receivable is $20 000.
Beginning inventory is $14 000.
Beginning accounts payable is $60 000. (All from inventory purchases.)
Purchases are paid in full the month following the purchase.
Desired ending inventory is 20% of next month's cost of goods sold (COGS).
4) For March, budgeted cash collections are:
Select one:
a. $100 000
b. $170 000
c. $130 000
d. $200 000
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Explanation / Answer
Feb March Budgeted sales 1,00,000.00 2,00,000.00 Collection : 70% in same month 70,000.00 1,40,000.00 30% of previous month's sale - 30,000.00 Total collection for march 1,70,000.00 Thus option B would be correct
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