Scare-2-B-U (S2BU) specializes in costumes for all occasions. The average price
ID: 2589369 • Letter: S
Question
Scare-2-B-U (S2BU) specializes in costumes for all occasions. The average price of each of its costumes is $300. For each occasion, S2BU receives a 20 percent deposit two months before the occasion, 40 percent the month before, and the remainder on the day the costume is delivered. Based on information at hand, managers at S2BU expect to make costumes for the following number of occasions during the coming months:
Required:
a. What are the expected revenues for S2BU for each month, April through September? Revenues are recorded in the month of the occasion.
b. What are the expected cash receipts for each month, April through July?
April 55 May 30 June 15 July 40 August 45 September 100Explanation / Answer
(a) Expected revenues for S2BU for each month, April through September
Expected Revenue = Number of Occasions * Average Revenue
(b) Expected cash receipts for each month, April through July
20% deposit receives 2 months before the occasion = $300 * 20% = $60
40% deposit receives 1 month before the ocassion = $300 * $40% = $120
Balance 40% deposit receives on the day the costume is delivered = $300 * 40% = $120
In the month of April
= 2 month before deposit + 1 month before deposit + On the day of ocassion
= (15 * $ 60) + (30 * $120) + (55 * $120)
= $11,100
In the month of May
= 2 month before deposit + 1 month before deposit + On the day of ocassion
= (40 * $ 60) + (15 * $120) + (30 * $120)
= $7,800
In the month of June
= 2 month before deposit + 1 month before deposit + On the day of ocassion
= (45 * $ 60) + (40 * $120) + (15 * $120)
= $9,300
In the month of July
= 2 month before deposit + 1 month before deposit + On the day of ocassion
= (100 * $ 60) + (45 * $120) + (40 * $120)
= $16,200
Therefore, expected casf receipts :
Month Number of ocassions Average Price ($) Expected Revenue($) April 55 300 16,500 May 30 300 9,000 June 15 300 4,500 July 40 300 12,000 August 45 300 13,500 September 100 300 30,000Related Questions
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