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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